grap 102 vs ias 38 sept07 - accounting standards … · page 3 of 53 grap 102 ias 38 differences...

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COMPARISON OF GRAP 102 WITH IAS 38 GRAP 102 IAS 38 DIFFERENCES

Objective Objective .01 The objective of this Standard is to prescribe the

accounting treatment for intangible assets that are not dealt with specifically in another Standard of GRAP. This Standard requires an entity to recognise an intangible asset if, and only if, specified criteria are met. The Standard also specifies how to measure the carrying amount of intangible assets and requires specified disclosures about intangible assets.

1. The objective of this Standard is to prescribe the accounting treatment for intangible assets that are not dealt with specifically in another Standard. This Standard requires an entity to recognise an intangible asset if, and only if, specified criteria are met. The Standard also specifies how to measure the carrying amount of intangible assets and requires specified disclosures about intangible assets.

Paragraph similar.

Scope Scope .02 An entity that prepares and presents financial

statements under the accrual basis of accounting shall apply this Standard in the recognition, measurement and disclosure of intangible assets.

Standard public sector paragraph included in other Standards of GRAP – will not affect the initial adoption of GRAP 102.

.03 This Standard shall be applied in accounting for intangible assets, except:

(a) intangible assets that are within the scope of another Standard of GRAP;

(b) financial assets, as defined in the Standards of GRAP on Financial Instruments;

(c) the recognition and measurement of exploration and evaluation assets (see the International Financial Reporting Standard on Exploration for and Evaluation of Mineral Resources); and

(d) expenditure on the development and extraction of, minerals, oil, natural gas and similar non-regenerative resources.

2. This Standard shall be applied in accounting for intangible assets, except:

(a) intangible assets that are within the scope of another Standard;

(b) financial assets, as defined in IAS 32 Financial Instruments: Presentation;

(c) the recognition and measurement of exploration and evaluation assets (see IFRS 6 Exploration for and Evaluation of Mineral Resources); and

(d) expenditure on the development and extraction of, minerals, oil, natural gas and similar non-regenerative resources.

Paragraph similar.

.04 Where the accounting for a specific type of intangible asset is prescribed by another Standard of GRAP, an entity applies that Standard of GRAP. For example, this Standard does not apply to:

(a) intangible assets held by an entity for sale in the ordinary course of operations (see the

3. If another Standard prescribes the accounting for a specific type of intangible asset, an entity applies that Standard instead of this Standard. For example, this Standard does not apply to:

(a) intangible assets held by an entity for sale in

Wording differences but principle in GRAP 102 and IAS 38 similar –therefore no affect on initial adoption of GRAP 102. GRAP 102(a) to (f) and (h) and (i) similar to IAS 38 (a) to (h).

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GRAP 102 IAS 38 DIFFERENCES Standard of GRAP on Inventories and the Standard of GRAP on Construction Contracts).

(b) deferred tax assets (where applicable) (see the International Accounting Standard on Income Taxes).

(c) leases that are within the scope of the Standard of GRAP on Leases.

(d) assets arising from employee benefits (see the Standard of GRAP on Employee Benefits).

(e) financial assets as defined in the Standards of GRAP on Financial Instruments. The recognition and measurement of some financial assets are covered by the Standards of GRAP on Consolidated and Separate Financial Statements, Investments in Associates and Interests in Joint Ventures.

(f) goodwill acquired in an entity combination (see the Standard of GRAP on Entity Combinations).

(g) in-process research and development projects acquired through an entity combination (see the Standard of GRAP on Entity Combinations).

(h) deferred acquisition costs, and intangible assets, arising from an insurer’s contractual rights under insurance contracts within the scope of the International Financial Reporting Standard on Insurance Contracts. The International Financial Reporting Standard on Insurance Contracts sets out specific disclosure requirements for those deferred acquisition costs but not for those intangible assets. Therefore, the disclosure requirements in this Standard apply to those intangible assets.

(i) non-current intangible assets classified as

the ordinary course of business (see IAS 2 Inventories and IAS 11 Construction Contracts).

(b) deferred tax assets (see IAS 12 Income Taxes).

(c) leases that are within the scope of IAS 17 Leases.

(d) assets arising from employee benefits (see IAS 19 Employee Benefits).

(e) financial assets as defined in IAS 32. The recognition and measurement of some financial assets are covered by IAS 27 Consolidated and Separate Financial Statements, IAS 28 Investments in Associates and IAS 31 Interests in Joint Ventures.

(f) goodwill acquired in a business combination (see IFRS 3 Business Combinations).

(g) deferred acquisition costs, and intangible assets, arising from an insurer’s contractual rights under insurance contracts within the scope of IFRS 4 Insurance Contracts. IFRS 4 sets out specific disclosure requirements for those deferred acquisition costs but not for those intangible assets. Therefore, the disclosure requirements in this Standard apply to those intangible assets.

(h) non-current intangible assets classified as held for sale (or included in a disposal group that is classified as held for sale) in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

GRAP (g) - GRAP 102 excludes guidance on accounting for intangible assets acquired as part of an entity combination and in-process research and development costs acquired in an entity combination, as the Board has not yet considered the applicability of entity combinations to the South African public sector – SA public sector specific amendment.

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GRAP 102 IAS 38 DIFFERENCES held for sale (or included in a disposal group that is classified as held for sale) in accordance with the Standard of GRAP on Non-current Assets Held for Sale and Discontinued Operations.

.05 Some intangible assets may be contained in or on a physical substance such as a compact disc (in the case of computer software), legal documentation (in the case of a licence or patent) or film. In determining whether an asset that incorporates both intangible and tangible elements should be treated under the Standard of GRAP on Property, Plant and Equipment or as an intangible asset under this Standard, an entity uses judgement to assess which element is more significant. For example, computer software for a computer-controlled machine tool that cannot operate without that specific software is an integral part of the related hardware and it is treated as property, plant and equipment. The same applies to the operating system of a computer. When the software is not an integral part of the related hardware, computer software is treated as an intangible asset.

4. Some intangible assets may be contained in or on a physical substance such as a compact disc (in the case of computer software), legal documentation (in the case of a licence or patent) or film. In determining whether an asset that incorporates both intangible and tangible elements should be treated under IAS 16 Property, Plant and Equipment or as an intangible asset under this Standard, an entity uses judgement to assess which element is more significant. For example, computer software for a computer-controlled machine tool that cannot operate without that specific software is an integral part of the related hardware and it is treated as property, plant and equipment. The same applies to the operating system of a computer. When the software is not an integral part of the related hardware, computer software is treated as an intangible asset.

Paragraph similar.

.06 This Standard applies to, among other things, expenditure on advertising, training, start-up, research and development activities. Research and development activities are directed to the development of knowledge. Therefore, although these activities may result in an asset with physical substance (e.g. a prototype), the physical element of the asset is secondary to its intangible component, i.e. the knowledge embodied in it.

5. This Standard applies to, among other things, expenditure on advertising, training, start-up, research and development activities. Research and development activities are directed to the development of knowledge. Therefore, although these activities may result in an asset with physical substance (eg a prototype), the physical element of the asset is secondary to its intangible component, ie the knowledge embodied in it.

Paragraph similar.

.07 In the case of a finance lease, the underlying asset may be either tangible or intangible. After initial recognition, a lessee accounts for an intangible asset held under a finance lease in accordance with this Standard. Rights under licensing agreements for items such as motion picture films, video recordings, plays, manuscripts, patents and copyrights are excluded from the scope of the Standard of GRAP on Leases and are

6. In the case of a finance lease, the underlying asset may be either tangible or intangible. After initial recognition, a lessee accounts for an intangible asset held under a finance lease in accordance with this Standard. Rights under licensing agreements for items such as motion picture films, video recordings, plays, manuscripts, patents and copyrights are excluded from the scope of IAS 17 and are within the scope of this

Paragraph similar.

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GRAP 102 IAS 38 DIFFERENCES within the scope of this Standard.

Standard.

.08 Exclusions from the scope of a Standard may occur if

activities or transactions are so specialised that they give rise to accounting issues that may need to be dealt with in a different way. Such issues arise in the accounting for expenditure on the exploration for, or development and extraction of, oil, gas and mineral deposits in extractive industries and in the case of insurance contracts. Therefore, this Standard does not apply to expenditure on such activities and contracts. However, this Standard applies to other intangible assets used (such as computer software), and other expenditure incurred (such as start-up costs), in extractive industries or by insurers.

7. Exclusions from the scope of a Standard may occur if activities or transactions are so specialised that they give rise to accounting issues that may need to be dealt with in a different way. Such issues arise in the accounting for expenditure on the exploration for, or development and extraction of, oil, gas and mineral deposits in extractive industries and in the case of insurance contracts. Therefore, this Standard does not apply to expenditure on such activities and contracts. However, this Standard applies to other intangible assets used (such as computer software), and other expenditure incurred (such as start-up costs), in extractive industries or by insurers.

Paragraph similar.

Definitions Definitions .09 The following terms are used in this Standard with the

meanings specified:

An active market is a market in which all the following conditions exist:

(a) the items traded in the market are homogeneous;

(b) willing buyers and sellers can normally be found at any time; and

(c) prices are available to the public.

Amortisation is the systematic allocation of the depreciable amount of an intangible asset over its useful life.

An asset is a resource:

(a) controlled by an entity as a result of past events; and

(b) from which future economic benefits or service potential are expected to flow to the entity.

Carrying amount is the amount at which an asset is recognised after deducting any accumulated

8. The following terms are used in this Standard with the meanings specified:

An active market is a market in which all the following conditions exist:

(a) the items traded in the market are homogeneous;

(b) willing buyers and sellers can normally be found at any time; and

(c) prices are available to the public.

The agreement date for a business combination is the date that a substantive agreement between the combining parties is reached and, in the case of publicly listed entities, announced to the public. In the case of a hostile takeover, the earliest date that a substantive agreement between the combining parties is reached is the date that a sufficient number of the acquiree’s owners have accepted the acquirer’s offer for the acquirer to obtain control of the acquiree.

Amortisation is the systematic allocation of the

GRAP 102 contains additional and different set of definitions as these definitions are relevant to an understanding of this Standard.

GRAP 102 definitions have also incorporated the concept of “service potential” – public sector specific differences so no affect on initial adoption of GRAP 102. Following definitions are similar:

• Active market • Amortisation • Asset (except for reference to service potential) • Cost (except for where vs when) • Depreciable amount • Development • Entity specific value (except for reference to

service potential) • Intangible asset • Monetary assets • Research • Residual value • Useful life

“Carrying amount”, “fair value” – wording differences but principle similar.

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GRAP 102 IAS 38 DIFFERENCES amortisation and accumulated impairment losses thereon.

Cash-generating assets are assets held to generate a commercial return.

Cost is the amount of cash or cash equivalents paid or the fair value of the other consideration given to acquire an asset at the time of its acquisition or construction, or, where applicable, the amount attributed to that asset when initially recognised in accordance with the specific requirements of other Standards of GRAP.

Depreciable amount is the cost of an asset, or other amount substituted for cost, less its residual value.

Development is the application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems or services before the start of production or use.

Entity-specific value is the present value of the cash flows or service potential an entity expects to arise from the continuing use of an asset and from its disposal at the end of its useful life or expects to incur when settling a liability.

Fair value is the amount for which an asset could be exchanged, or a liability settled between knowledgeable, willing parties in an arm’s length transaction.

An impairment loss of a cash-generating asset is the amount by which the carrying amount of an asset exceeds its recoverable amount.

An impairment loss of a non-cash-generating asset is the amount by which the carrying amount of an asset exceeds its recoverable service amount.

An intangible asset is an identifiable non-monetary asset without physical substance.

Monetary assets are money held and assets to be received in fixed or determinable amounts of money.

depreciable amount of an intangible asset over its useful life.

An asset is a resource:

(a) controlled by an entity as a result of past events; and

(b) from which future economic benefits are expected to flow to the entity.

Carrying amount is the amount at which an asset is recognised in the balance sheet after deducting any accumulated amortisation and accumulated impairment losses thereon.

Cost is the amount of cash or cash equivalents paid or the fair value of other consideration given to acquire an asset at the time of its acquisition or construction, or, when applicable, the amount attributed to that asset when initially recognised in accordance with the specific requirements of other IFRSs, eg IFRS 2 Share-based Payment.

Depreciable amount is the cost of an asset, or other amount substituted for cost, less its residual value.

Development is the application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems or services before the start of commercial production or use.

Entity-specific value is the present value of the cash flows an entity expects to arise from the continuing use of an asset and from its disposal at the end of its useful life or expects to incur when settling a liability.

Fair value of an asset is the amount for which that asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction.

GRAP 102 does not include def of “agreement date” because GRAP 102 excludes guidance on accounting for intangible assets acquired as part of an entity combination and in-process research and development costs acquired in an entity combination, as the Board has not yet considered the applicability of entity combinations to the South African public sector – SA public sector specific amendment. GRAP distinguish between impairment loss of cash-generating and non-cash-generating assets – public sector specific difference. GRAP definition included for “fair value” – as per other Standards of GRAP.

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GRAP 102 IAS 38 DIFFERENCES Non-cash-generating assets are assets other than cash-generating assets.

Non-monetary assets are assets other than monetary assets.

Recoverable amount is the higher of a cash-generating asset’s fair value less costs to sell and its value in use.

Recoverable service amount is the higher of a non-cash-generating asset’s fair value less costs to sell and its value in use.

Research is original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding.

The residual value of an intangible asset is the estimated amount that an entity would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset was already of the age and in the condition expected at the end of its useful life.

Useful life is:

(a) the period over which an asset is expected to be available for use by an entity; or

(b) the number of production or similar units expected to be obtained from the asset by an entity.

Value in use of a cash-generating asset is the present value of the future cash flows expected to be derived from an asset or cash-generating unit.

Value in use of a non-cash-generating asset is the present value of the asset’s remaining service potential.

Terms defined in other Standards of GRAP are used in this Standard with the same meaning as in those other Standards of GRAP.

An impairment loss is the amount by which the carrying amount of an asset exceeds its recoverable amount.

An intangible asset is an identifiable non-monetary asset without physical substance.

Monetary assets are money held and assets to be received in fixed or determinable amounts of money.

Research is original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding.

The residual value of an intangible asset is the estimated amount that an entity would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life.

Useful life is:

(a) the period over which an asset is expected to be available for use by an entity; or

(b) the number of production or similar units expected to be obtained from the asset by an entity.

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GRAP 102 IAS 38 DIFFERENCES Intangible assets

.10 Entities frequently expend resources, or incur liabilities, on the acquisition, development, maintenance or enhancement of intangible resources such as scientific or technical knowledge, design and implementation of new processes or systems, licences, intellectual property, market knowledge and trademarks (including brand names and publishing titles). Intangible assets may also be transferred or donated to an entity. Common examples of items encompassed by these broad headings are computer software, patents, copyrights, motion picture films, customer lists, the right to use water and/or land.

Intangible assets 9. Entities frequently expend resources, or incur

liabilities, on the acquisition, development, maintenance or enhancement of intangible resources such as scientific or technical knowledge, design and implementation of new processes or systems, licences, intellectual property, market knowledge and trademarks (including brand names and publishing titles). Common examples of items encompassed by these broad headings are computer software, patents, copyrights, motion picture films, customer lists, mortgage servicing rights, fishing licences, import quotas, franchises, customer or supplier relationships, customer loyalty, market share and marketing rights.

GRAP 102 includes phrase to explain concept of intangible assets acquired at no cost of for a nominal consideration – public sector specific amendment. GRAP 102 includes additional public sector examples – SA public sector specific amendment. No affect on initial adoption of GRAP 102 as underlying principles in GRAP 102 and IAS 38 similar.

.11 Not all the items described in paragraph .10 meet the definition of an intangible asset, i.e. identifiability, control over a resource and existence of future economic benefits or service potential. If an item within the scope of this Standard does not meet the definition of an intangible asset, expenditure to acquire it or generate it internally is recognised as an expense when it is incurred.

10. Not all the items described in paragraph 9 meet the definition of an intangible asset, ie identifiability, control over a resource and existence of future economic benefits. If an item within the scope of this Standard does not meet the definition of an intangible asset, expenditure to acquire it or generate it internally is recognised as an expense when it is incurred. However, if the item is acquired in a business combination, it forms part of the goodwill recognised at the acquisition date (see paragraph 68).

GRAP 102 incorporates concept of “service potential”. GRAP 102 excludes guidance on accounting for intangible assets acquired as part of an entity combination and in-process research and development costs acquired in an entity combination, as the Board has not yet considered the applicability of entity combinations to the South African public sector – SA public sector specific amendment. Rest of paragraph similar.

Identifiability

11. The definition of an intangible asset requires an intangible asset to be identifiable to distinguish it from goodwill. Goodwill acquired in a business combination represents a payment made by the acquirer in anticipation of future economic benefits from assets that are not capable of being individually identified and separately recognised. The future economic benefits may result from synergy between the identifiable assets acquired or from assets that, individually, do not qualify for recognition in the financial statements but for which the acquirer is prepared to make a payment in the business combination.

GRAP 102 excludes guidance on accounting for intangible assets acquired as part of an entity combination and in-process research and development costs acquired in an entity combination, as the Board has not yet considered the applicability of entity combinations to the South African public sector – SA public sector specific amendment.

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GRAP 102 IAS 38 DIFFERENCES Identifiability

.12 An asset meets the identifiability criterion in the definition of an intangible asset when it:

(a) is separable, i.e. is capable of being separated or divided from the entity and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, asset or liability; or

(b) arises from contractual rights (including rights arising from binding arrangements) or other legal rights (excluding rights granted by statute), regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.

12. An asset meets the identifiability criterion in the

definition of an intangible asset when it:

(a) is separable, ie is capable of being separated or divided from the entity and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, asset or liability; or

(b) arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.

In GRAP 102 the identifiability criterion in the definition of an intangible asset has been expanded to include contractual rights arising from binding arrangements, and to exclude rights granted by statute – SA public sector specific amendment.

.13 Entities may execute a regulatory right over certain activities, for example, fishing, mining or industries such as telecommunications and energy. These regulatory rights and the power to transfer, license, rent or execute such rights, does not meet the definition of an intangible asset when these rights are granted in terms of statute. These rights, once issued, are usually an intangible asset of those individuals or entities that acquired each right, provided that the acquirer can demonstrate that the definition and recognition criteria of an intangible asset are met.

SA specific public sector amendment – regulatory right does not meet the definition of intangible assets.

.14 Similarly, a municipality’s right to levy taxes is granted in terms of a statute. The right arising from the statute does not qualify for recognition as an intangible asset in terms of this Standard, because the cost or fair value of the right to levy taxes cannot be reliably measured. Future economic benefits or service potential arise once a past event has occurred, for example income tax will become leviable once a taxable event has occurred. There might be a cost associated with exercising the right granted in terms of the statute, for example the preparation of a valuation roll to levy property rates. The principles in, amongst others, the Framework for the Preparation and Presentation of Financial Statements, and other


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GRAP 102 IAS 38 DIFFERENCES applicable Standards of GRAP, should be applied to account for costs incurred to exercise the right granted in terms of legislation.

.15 The rights to use naturally occurring assets, including

non-cultivated biological resources and water rights, which are administrated by government, must be recognised as intangible assets when the recognition criteria in paragraph .24 are met. When the recognition criteria have been met, those rights that have been acquired, transferred, or donated and that are not included in the value of the associated land should be recognised as intangible assets.


Control

.16 An entity controls an asset if the entity has the power to obtain the future economic benefits or service potential flowing from the underlying resource and to restrict the access of others to those benefits. The capacity of an entity to control the future economic benefits or service potential from an intangible asset would normally stem from legal rights that are enforceable in a court of law, or rights under binding arrangements enforceable by entities that are a party to the arrangement. In the absence of legal rights, it is more difficult to demonstrate control. However, legal enforceability of a right is not a necessary condition for control because an entity may be able to control the future economic benefits or service potential differently.

Control

13. An entity controls an asset if the entity has the power to obtain the future economic benefits flowing from the underlying resource and to restrict the access of others to those benefits. The capacity of an entity to control the future economic benefits from an intangible asset would normally stem from legal rights that are enforceable in a court of law. In the absence of legal rights, it is more difficult to demonstrate control. However, legal enforceability of a right is not a necessary condition for control because an entity may be able to control the future economic benefits in some other way.

GRAP 102 incorporates concept of “service potential”. GRAP 102 has been expanded to include contractual rights arising from binding arrangements – SA public sector specific amendment.

GRAP refers to “future economic benefits or service potential” vs IAS refers to “future economic benefits in some other way” – principle similar therefore no affect on initial adoption of GRAP 102. Rest of paragraph similar.

.17 Market and technical knowledge may give rise to future economic benefits or service potential. An entity controls those benefits if, for example, the knowledge is protected by legal rights such as copyrights, a restraint of trade agreement (where permitted) or by a legal duty on employees to maintain confidentiality.

14. Market and technical knowledge may give rise to future economic benefits. An entity controls those benefits if, for example, the knowledge is protected by legal rights such as copyrights, a restraint of trade agreement (where permitted) or by a legal duty on employees to maintain confidentiality.

GRAP 102 incorporates concept of “service potential”. Rest of paragraph similar

.18 An entity may have a team of skilled staff and may be able to identify incremental staff skills leading to future economic benefits or service potential from training.

15. An entity may have a team of skilled staff and may be able to identify incremental staff skills leading to future economic benefits from training. The entity may also

GRAP 102 incorporates concept of “service potential”. Rest of paragraph similar

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GRAP 102 IAS 38 DIFFERENCES The entity may also expect that the staff will continue to make their skills available to the entity. However, an entity usually has insufficient control over the expected future economic benefits or service potential arising from a team of skilled staff and from training for these items to meet the definition of an intangible asset. For a similar reason, specific management or technical talent is unlikely to meet the definition of an intangible asset, unless it is protected by legal rights to use it and to obtain the future economic benefits or service potential expected from it, and it also meets the other parts of the definition.

expect that the staff will continue to make their skills available to the entity. However, an entity usually has insufficient control over the expected future economic benefits arising from a team of skilled staff and from training for these items to meet the definition of an intangible asset. For a similar reason, specific management or technical talent is unlikely to meet the definition of an intangible asset, unless it is protected by legal rights to use it and to obtain the future economic benefits expected from it, and it also meets the other parts of the definition.

.19 An entity may have a portfolio of customers and expect that, because of its efforts in building customer relationships and loyalty, the customers will continue to engage with the entity. However, in the absence of legal rights to protect, or other ways to control, the relationships with customers or the loyalty of the customers to the entity, the entity usually has insufficient control over the expected economic benefits or service potential from customer relationships and loyalty for such items (e.g. portfolio of customers, customer relationships and customer loyalty) to meet the definition of intangible assets. In the absence of legal rights to protect customer relationships, exchange transactions for the same or similar non-contractual customer relationships (other than as part of an entity combination) provide evidence that the entity is nonetheless able to control the expected future economic benefits or service potential flowing from the customer relationships. Because such exchange transactions also provide evidence that the customer relationships are separable, those customer relationships meet the definition of an intangible asset.

16. An entity may have a portfolio of customers or a market share and expect that, because of its efforts in building customer relationships and loyalty, the customers will continue to trade with the entity. However, in the absence of legal rights to protect, or other ways to control, the relationships with customers or the loyalty of the customers to the entity, the entity usually has insufficient control over the expected economic benefits from customer relationships and loyalty for such items (eg portfolio of customers, market shares, customer relationships and customer loyalty) to meet the definition of intangible assets. In the absence of legal rights to protect customer relationships, exchange transactions for the same or similar non-contractual customer relationships (other than as part of a business combination) provide evidence that the entity is nonetheless able to control the expected future economic benefits flowing from the customer relationships. Because such exchange transactions also provide evidence that the customer relationships are separable, those customer relationships meet the definition of an intangible asset.

GRAP excludes phrase “or a market share” as it is not applicable to public sector. GRAP refers to “engage with entity” vs IAS refers to “trade with entity” – no affect on initial adoption of GRAP 102 as underlying principles similar. GRAP 102 incorporates concept of “service potential”. Terminology differences (entity vs business combinations) – no affect on initial adoption of GRAP 102. Rest of paragraph similar

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GRAP 102 IAS 38 DIFFERENCES Future economic benefits or service potential

.20 The future economic benefits or service potential flowing from an intangible asset may include revenue from the sale of products or services, cost savings, or other benefits resulting from the use of the asset by the entity. For example, a municipality develops a system that allows citizens to renew licences on-line. This system results in increased service potential to deliver municipal services rather than increased future revenues.

Future economic benefits 17. The future economic benefits flowing from an

intangible asset may include revenue from the sale of products or services, cost savings, or other benefits resulting from the use of the asset by the entity. For example, the use of intellectual property in a production process may reduce future production costs rather than increase future revenues.

GRAP 102 incorporates concept of “service potential”. GRAP 102 example more public sector specific – additional guidance will not affect the initial adoption of GRAP 102 as underlying principles in GRAP 102 and IAS 38 similar.

Recognition and measurement Recognition and measurement .21 The recognition of an item as an intangible asset

requires an entity to demonstrate that the item meets:

(a) the definition of an intangible asset (see paragraphs .09 to .20); and

(b) the recognition criteria (see paragraphs .24 to .27).

This requirement applies to costs incurred initially to acquire or internally generate an intangible asset or intangible assets acquired at no or nominal cost, and those incurred subsequently to add to, replace part of, or service it.

18. The recognition of an item as an intangible asset requires an entity to demonstrate that the item meets:

(a) the definition of an intangible asset (see paragraphs 8–17); and

(b) the recognition criteria (see paragraphs 21–23).

This requirement applies to costs incurred initially to acquire or internally generate an intangible asset and those incurred subsequently to add to, replace part of, or service it.

Paragraph similar.

.22 Paragraphs .29 to .31 deal with intangible assets acquired at no cost or for a nominal cost, paragraphs .32 to .39 deal with the application of the recognition criteria to separately acquired intangible assets and paragraphs .40 to .41 deal with subsequent expenditure on an acquired in-process research and development project. Paragraphs .42 to .43 deal with exchanges of intangible assets, and paragraphs .45 to .46 deal with the treatment of internally generated goodwill. Paragraphs .48 to .70 deal with the initial recognition and measurement of internally generated intangible assets.

19. Paragraphs 25–32 deal with the application of the recognition criteria to separately acquired intangible assets, and paragraphs 33–43 deal with their application to intangible assets acquired in a business combination. Paragraph 44 deals with the initial measurement of intangible assets acquired by way of a government grant, paragraphs 45–47 with exchanges of intangible assets, and paragraphs 48–50 with the treatment of internally generated goodwill. Paragraphs 51–67 deal with the initial recognition and measurement of internally generated intangible assets.

GRAP 102 includes additional guidance on the recognition of intangible assets acquired at no cost of for a nominal consideration – public sector specific amendment. GRAP 102 excludes guidance on accounting for intangible assets acquired as part of an entity combination and in-process research and development costs acquired in an entity combination, as the Board has not yet considered the applicability of entity combinations to the South African public sector – SA public sector specific amendment.

.23 The nature of intangible assets is such that, in many cases, there are no additions to such an asset or replacements of part of it. Accordingly, most subsequent expenditures are likely to maintain the

20. The nature of intangible assets is such that, in many cases, there are no additions to such an asset or replacements of part of it. Accordingly, most subsequent expenditures are likely to maintain the

GRAP 102 incorporates concept of “service potential”. Terminology differences (operations vs business) – principles in GRAP 102 and IAS 38 therefore no affect on

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GRAP 102 IAS 38 DIFFERENCES expected future economic benefits or service potential embodied in an existing intangible asset rather than meet the definition of an intangible asset and the recognition criteria in this Standard. In addition, it is often difficult to attribute subsequent expenditure directly to a particular intangible asset rather than to the operations as a whole. Therefore, only rarely will subsequent expenditure — expenditure incurred after the initial recognition of an acquired intangible asset or after completion of an internally generated intangible asset — be recognised in the carrying amount of an asset. Consistently with paragraph .64 subsequent expenditure on brands, mastheads, publishing titles, customer lists and items similar in substance (whether externally acquired or internally generated) is always recognised in surplus or deficit as incurred. This is because such expenditure cannot be distinguished from expenditure to develop the operation as a whole.

expected future economic benefits embodied in an existing intangible asset rather than meet the definition of an intangible asset and the recognition criteria in this Standard. In addition, it is often difficult to attribute subsequent expenditure directly to a particular intangible asset rather than to the business as a whole. Therefore, only rarely will subsequent expenditure—expenditure incurred after the initial recognition of an acquired intangible asset or after completion of an internally generated intangible asset—be recognised in the carrying amount of an asset. Consistently with paragraph 63, subsequent expenditure on brands, mastheads, publishing titles, customer lists and items similar in substance (whether externally acquired or internally generated) is always recognised in profit or loss as incurred. This is because such expenditure cannot be distinguished from expenditure to develop the business as a whole.

initial adoption of GRAP 102. Rest of paragraph similar.

.24 An intangible asset shall be recognised if, and only if:

(a) it is probable that the expected future economic benefits or service potential that are attributable to the asset will flow to the entity; and

(b) the cost or fair value of the asset can be measured reliably.

21. An intangible asset shall be recognised if, and only if:

(a) it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and

(b) the cost of the asset can be measured reliably.

GRAP 102 incorporates concept of “service potential”. GRAP 102 incorporates “fair value” when intangible asset acquired at no or for a nominal value.

.25 An entity shall assess the probability of expected future economic benefits or service potential using reasonable and supportable assumptions that represent management’s best estimate of the set of economic conditions that will exist over the useful life of the asset.

22. An entity shall assess the probability of expected future economic benefits using reasonable and supportable assumptions that represent management’s best estimate of the set of economic conditions that will exist over the useful life of the asset.

GRAP 102 incorporates concept of “service potential”. Rest of paragraph similar.

.26 An entity uses judgement to assess the degree of certainty attached to the flow of future economic benefits or service potential that are attributable to the use of the asset on the basis of the evidence available at the time of initial recognition, giving greater weight to external evidence.

23. An entity uses judgement to assess the degree of certainty attached to the flow of future economic benefits that are attributable to the use of the asset on the basis of the evidence available at the time of initial recognition, giving greater weight to external evidence.


.27 A distinction between the costs incurred in the Additional SA public sector guidance included in GRAP 102

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GRAP 102 IAS 38 DIFFERENCES acquisition, development and construction of an item of property, plant and equipment, and the intangible asset associated with the item of property, plant and equipment needs to be made when both the tangible and the intangible asset are recognised and measured. An intangible asset should only be recognised when the requirements in paragraph .24 have been met. For example,an airport is generally separable from the landing rights associated with the airport. If the landing rights meet the criteria specified in paragraph .24, the landing rights should be recognised as an intangible asset. The recognition criteria in the Standard of GRAP on Property, Plant and Equipment should be applied to the recognition of the airport building.

to explain that distinction should be made between assets associated with the item of property, plant and equipment and the intangible asset – SA specific public sector amendment. Additional guidance provided in GRAP 102 will not affect the initial adoption of GRAP 102.

.28 An intangible asset shall be measured initially at cost.

24. An intangible asset shall be measured initially at cost.

Paragraph similar.

Intangible assets acquired at no or a nominal cost

.29 Where an intangible asset is acquired at no cost, or for a nominal cost, the cost shall be its fair value as at the date of acquisition.

GRAP 102 includes additional guidance on the recognition of intangible assets acquired at no cost of for a nominal consideration – public sector specific amendment.

.30 An intangible asset may be donated or contributed to the entity. For example, a private medical research facility donates a patent for a vaccine to a public sector entity that manufactures the vaccine to be used in public health care facilities. An intangible asset may also be acquired at nil or nominal consideration through the exercise of powers of sequestration. Under these circumstances the cost of the item is its fair value as at the date it is acquired.


.31 For the purposes of this Standard, the measurement at initial recognition of an intangible asset acquired at no or a nominal cost, at its fair value consistent with the requirements of paragraph .29, does not constitute a revaluation. Accordingly, the revaluation requirements in paragraph .78 and the supporting commentary in paragraphs .79 to .83 only apply where an entity elects to revalue an intangible asset in subsequent reporting periods.


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GRAP 102 IAS 38 DIFFERENCES Separate acquisition

.32 Normally, the price an entity pays to acquire separately an intangible asset reflects expectations about the probability that the expected future economic benefits or service potential embodied in the asset will flow to the entity. In other words, the effect of probability is reflected in the cost of the asset. Therefore, the probability recognition criterion in paragraph .24(a) is always considered to be satisfied for separately acquired intangible assets.

Separate acquisition 25. Normally, the price an entity pays to acquire separately

an intangible asset reflects expectations about the probability that the expected future economic benefits embodied in the asset will flow to the entity. In other words, the effect of probability is reflected in the cost of the asset. Therefore, the probability recognition criterion in paragraph 21(a) is always considered to be satisfied for separately acquired intangible assets.


.33 In addition, the cost of a separately acquired intangible asset can usually be measured reliably. This is particularly so when the purchase consideration is in the form of cash or other monetary assets.

26. In addition, the cost of a separately acquired intangible asset can usually be measured reliably. This is particularly so when the purchase consideration is in the form of cash or other monetary assets.

Paragraph similar.

.34 The cost of a separately acquired intangible asset comprises:

(a) its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates; and

(b) any directly attributable costs of preparing the asset for its intended use.

27. The cost of a separately acquired intangible asset comprises:

(a) its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates; and

(b) any directly attributable cost of preparing the asset for its intended use.

Paragraph similar.

.35 Examples of directly attributable costs are:

(a) costs of employee benefits (as defined in the Standard of GRAP on Employee Benefits) arising directly from bringing the asset to its working condition;

(b) professional fees arising directly from bringing the asset to its working condition; and

(c) costs of testing whether the asset is functioning properly.

28. Examples of directly attributable costs are:

(a) costs of employee benefits (as defined in IAS 19 Employee Benefits) arising directly from bringing the asset to its working condition;

(b) professional fees arising directly from bringing the asset to its working condition; and

(c) costs of testing whether the asset is functioning properly.

Paragraph similar.

.36 Examples of expenditures that are not part of the cost of an intangible asset are:

29. Examples of expenditures that are not part of the cost of an intangible asset are:

Similar.

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GRAP 102 IAS 38 DIFFERENCES (a) costs of introducing a new product or service

(including costs of advertising and promotional activities);

(b) costs of conducting operations in a new location or with a new class of customer (including costs of staff training); and

(c) administration and other general overhead costs.

(a) costs of introducing a new product or service (including costs of advertising and promotional activities);

(b) costs of conducting business in a new location or with a new class of customer (including costs of staff training); and

(c) administration and other general overhead costs.

(a) and (c) – sub-paragraphs similar. (b) - terminology differences (operations vs business) – principles in GRAP 102 and IAS 38 therefore no affect on initial adoption of GRAP 102.

.37 Recognition of costs in the carrying amount of an intangible asset ceases when the asset is in the condition necessary for it to be capable of operating in the manner intended by management. Therefore, costs incurred in using or redeploying an intangible asset are not included in the carrying amount of that asset. For example, the following costs are not included in the carrying amount of an intangible asset:

(a) costs incurred while an asset capable of operating in the manner intended by management has yet to be brought into use; and

(b) initial operating losses, such as those incurred while demand for the asset’s output builds up.

30. Recognition of costs in the carrying amount of an intangible asset ceases when the asset is in the condition necessary for it to be capable of operating in the manner intended by management. Therefore, costs incurred in using or redeploying an intangible asset are not included in the carrying amount of that asset. For example, the following costs are not included in the carrying amount of an intangible asset:

(a) costs incurred while an asset capable of operating in the manner intended by management has yet to be brought into use; and

(b) initial operating losses, such as those incurred while demand for the asset’s output builds up.

Paragraph similar.

.38 Some operations occur in connection with the development of an intangible asset, but are not necessary to bring the asset to the condition necessary for it to be capable of operating in the manner intended by management. These incidental operations may occur before or during the development activities. Because incidental operations are not necessary to bring an asset to the condition necessary for it to be capable of operating in the manner intended by management, the revenue and related expenses of incidental operations are recognised immediately in surplus or deficit, and included in their respective classifications of revenue and expense.

31. Some operations occur in connection with the development of an intangible asset, but are not necessary to bring the asset to the condition necessary for it to be capable of operating in the manner intended by management. These incidental operations may occur before or during the development activities. Because incidental operations are not necessary to bring an asset to the condition necessary for it to be capable of operating in the manner intended by management, the income and related expenses of incidental operations are recognised immediately in profit or loss, and included in their respective classifications of income and expense.

Terminology differences (revenue and surplus or deficit vs income and profit or loss) – public sector terminology differences but principles in GRAP 102 and IAS 38 therefore no affect on initial adoption of GRAP 102.

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GRAP 102 IAS 38 DIFFERENCES

.39 If payment for an intangible asset is deferred beyond normal credit terms, its cost is the cash price equivalent. The difference between this amount and the total payments is recognised as interest expense over the period of credit unless it is capitalised in accordance with the capitalisation treatment permitted in the Standard of GRAP on Borrowing Costs.

32. If payment for an intangible asset is deferred beyond normal credit terms, its cost is the cash price equivalent. The difference between this amount and the total payments is recognised as interest expense over the period of credit unless it is capitalised in accordance with the capitalisation treatment permitted in IAS 23 Borrowing Costs.

Paragraph similar.

Acquisition as part of a business combination 33. In accordance with IFRS 3 Business Combinations, if

an intangible asset is acquired in a business combination, the cost of that intangible asset is its fair value at the acquisition date. The fair value of an intangible asset reflects market expectations about the probability that the future economic benefits embodied in the asset will flow to the entity. In other words, the effect of probability is reflected in the fair value measurement of the intangible asset. Therefore, the probability recognition criterion in paragraph 21(a) is always considered to be satisfied for intangible assets acquired in business combinations.


34. Therefore, in accordance with this Standard and IFRS 3, an acquirer recognises at the acquisition date separately from goodwill an intangible asset of the acquiree if the asset’s fair value can be measured reliably, irrespective of whether the asset had been recognised by the acquiree before the business combination. This means that the acquirer recognises as an asset separately from goodwill an in-process research and development project of the acquiree if the project meets the definition of an intangible asset and its fair value can be measured reliably. An acquiree’s in-process research and development project meets the definition of an intangible asset when it:

(a) meets the definition of an asset; and

(b) is identifiable, ie is separable or arises from contractual or other legal rights.


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GRAP 102 IAS 38 DIFFERENCES Measuring the fair value of an intangible asset acquired

in a business combination

35. The fair value of intangible assets acquired in business combinations can normally be measured with sufficient reliability to be recognised separately from goodwill. When, for the estimates used to measure an intangible asset’s fair value, there is a range of possible outcomes with different probabilities, that uncertainty enters into the measurement of the asset’s fair value, rather than demonstrates an inability to measure fair value reliably. If an intangible asset acquired in a business combination has a finite useful life, there is a rebuttable presumption that its fair value can be measured reliably.


36. An intangible asset acquired in a business combination might be separable, but only together with a related tangible or intangible asset. For example, a magazine’s publishing title might not be able to be sold separately from a related subscriber database, or a trademark for natural spring water might relate to a particular spring and could not be sold separately from the spring. In such cases, the acquirer recognises the group of assets as a single asset separately from goodwill if the individual fair values of the assets in the group are not reliably measurable.


37. Similarly, the terms ‘brand’ and ‘brand name’ are often used as synonyms for trademarks and other marks. However, the former are general marketing terms that are typically used to refer to a group of complementary assets such as a trademark (or service mark) and its related trade name, formulas, recipes and technological expertise. The acquirer recognises as a single asset a group of complementary intangible assets comprising a brand if the individual fair values of the complementary assets are not reliably measurable. If the individual fair values of the complementary assets are reliably measurable, an acquirer may recognise them as a single asset provided the individual assets have similar useful lives.


38. The only circumstances in which it might not be GRAP 102 excludes guidance on accounting for

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GRAP 102 IAS 38 DIFFERENCES possible to measure reliably the fair value of an intangible asset acquired in a business combination are when the intangible asset arises from legal or other contractual rights and either:

(a) is not separable; or

(b) is separable, but there is no history or evidence of exchange transactions for the same or similar assets, and otherwise estimating fair value would be dependent on immeasurable variables.

intangible assets acquired as part of an entity combination and in-process research and development costs acquired in an entity combination, as the Board has not yet considered the applicability of entity combinations to the South African public sector – SA public sector specific amendment.

39. Quoted market prices in an active market provide the most reliable estimate of the fair value of an intangible asset (see also paragraph 78). The appropriate market price is usually the current bid price. If current bid prices are unavailable, the price of the most recent similar transaction may provide a basis from which to estimate fair value, provided that there has not been a significant change in economic circumstances between the transaction date and the date at which the asset’s fair value is estimated.


40. If no active market exists for an intangible asset, its fair value is the amount that the entity would have paid for the asset, at the acquisition date, in an arm’s length transaction between knowledgeable and willing parties, on the basis of the best information available. In determining this amount, an entity considers the outcome of recent transactions for similar assets.


41. Entities that are regularly involved in the purchase and

sale of unique intangible assets may have developed techniques for estimating their fair values indirectly. These techniques may be used for initial measurement of an intangible asset acquired in a business combination if their objective is to estimate fair value and if they reflect current transactions and practices in the industry to which the asset belongs. These techniques include, when appropriate:

(a) applying multiples reflecting current market


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GRAP 102 IAS 38 DIFFERENCES transactions to indicators that drive the profitability of the asset (such as revenue, market shares and operating profit) or to the royalty stream that could be obtained from licensing the intangible asset to another party in an arm’s length transaction (as in the ‘relief from royalty’ approach); or

(b) discounting estimated future net cash flows from the asset.

Subsequent expenditure on an acquired in-process research and development project

.40 Research or development expenditure that:

(a) relates to an in-process research or development project acquired separately and recognised as an intangible asset; and

(b) is incurred after the acquisition of that project

shall be accounted for in accordance with paragraphs .50 to .59.

Subsequent expenditure on an acquired in-process research and development project 42. Research or development expenditure that:

(a) relates to an in-process research or

development project acquired separately or in a business combination and recognised as an intangible asset; and

(b) is incurred after the acquisition of that project shall be accounted for in accordance with paragraphs 54–62.

GRAP 102 excludes guidance on accounting for in-process research and development costs acquired in an entity combination, as the Board has not yet considered the applicability of entity combinations to the South African public sector – SA public sector specific amendment.

Rest of paragraph similar.

.41 Applying the requirements in paragraphs .50 to .59 means that subsequent expenditure on an in-process research or development project acquired separately and recognised as an intangible asset is:

(a) recognised as an expense when incurred if it is research expenditure;

(b) recognised as an expense when incurred if it is development expenditure that does not satisfy the criteria for recognition as an intangible asset in paragraph .53; and

(c) added to the carrying amount of the acquired in-process research or development project if it is development expenditure that satisfies the recognition criteria in paragraph .53.

43. Applying the requirements in paragraphs 54–62 means that subsequent expenditure on an in-process research or development project acquired separately or in a business combination and recognised as an intangible asset is:

(a) recognised as an expense when incurred if it is research expenditure;

(b) recognised as an expense when incurred if it is development expenditure that does not satisfy the criteria for recognition as an intangible asset in paragraph 57; and

(c) added to the carrying amount of the acquired in-process research or development project if it is development expenditure that satisfies the recognition criteria in

GRAP 102 excludes guidance on accounting for in-process research and development costs acquired in an entity combination, as the Board has not yet considered the applicability of entity combinations to the South African public sector – SA public sector specific amendment.

Rest of paragraph similar

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GRAP 102 IAS 38 DIFFERENCES paragraph 57.

Acquisition by way of a government grant

44. In some cases, an intangible asset may be acquired

free of charge, or for nominal consideration, by way of a government grant. This may happen when a government transfers or allocates to an entity intangible assets such as airport landing rights, licences to operate radio or television stations, import licences or quotas or rights to access other restricted resources. In accordance with IAS 20 Accounting for Government Grants and Disclosure of Government Assistance, an entity may choose to recognise both the intangible asset and the grant initially at fair value. If an entity chooses not to recognise the asset initially at fair value, the entity recognises the asset initially at a nominal amount (the other treatment permitted by IAS 20) plus any expenditure that is directly attributable to preparing the asset for its intended use.


Exchange of assets .42 One or more intangible assets may be acquired in

exchange for a non-monetary asset or assets, or a combination of monetary and non-monetary assets. The following discussion refers simply to an exchange of one non-monetary asset for another, but it also applies to all exchanges described in the preceding sentence. The cost of such an intangible asset is measured at fair value unless the fair value of neither the asset received nor the asset given up is reliably measurable. The acquired asset is measured in this way even if an entity cannot immediately derecognise the asset given up. If the acquired asset is not measured at fair value, its cost is measured at the carrying amount of the asset given up.

Exchanges of assets 45. One or more intangible assets may be acquired in

exchange for a non-monetary asset or assets, or a combination of monetary and non-monetary assets. The following discussion refers simply to an exchange of one non-monetary asset for another, but it also applies to all exchanges described in the preceding sentence. The cost of such an intangible asset is measured at fair value unless (a) the exchange transaction lacks commercial substance or (b) the fair value of neither the asset received nor the asset given up is reliably measurable. The acquired asset is measured in this way even if an entity cannot immediately derecognise the asset given up. If the acquired asset is not measured at fair value, its cost is measured at the carrying amount of the asset given up.

IAS 38 provides guidance on intangible assets that may be acquired in exchange for non-monetary assets, where the exchange transaction lacks commercial substance but this guidance has been excluded from GRAP 102 as guidance is included in GRAP 23 – SA public sector specific amendment.


46. An entity determines whether an exchange transaction has commercial substance by considering the extent to which its future cash flows are expected to change as a result of the transaction. An exchange transaction has commercial substance if:

IAS 38 provides guidance on intangible assets that may be acquired in exchange for non-monetary assets, where the exchange transaction lacks commercial substance but this guidance has been excluded from GRAP 102 as guidance is included in GRAP 23 – SA public sector

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GRAP 102 IAS 38 DIFFERENCES

(a) the configuration (ie risk, timing and amount) of the cash flows of the asset received differs from the configuration of the cash flows of the asset transferred; or

(b) the entity-specific value of the portion of the entity’s operations affected by the transaction changes as a result of the exchange; and

(c) the difference in (a) or (b) is significant relative to the fair value of the assets exchanged.

For the purpose of determining whether an exchange transaction has commercial substance, the entity-specific value of the portion of the entity’s operations affected by the transaction shall reflect post-tax cash flows. The result of these analyses may be clear without an entity having to perform detailed calculations.

specific amendment.

.43 Paragraph .24(b) specifies that a condition for the recognition of an intangible asset is that the cost or fair value of the asset can be measured reliably. The fair value of an intangible asset for which comparable market transactions do not exist is reliably measurable if (a) the variability in the range of reasonable fair value estimates is not significant for that asset or (b) the probabilities of the various estimates within the range can be reasonably assessed and used in estimating fair value. If an entity is able to determine reliably the fair value of either the asset received or the asset given up, then the fair value of the asset given up is used to measure cost unless the fair value of the asset received is more clearly evident.

47. Paragraph 21(b) specifies that a condition for the recognition of an intangible asset is that the cost of the asset can be measured reliably. The fair value of an intangible asset for which comparable market transactions do not exist is reliably measurable if (a) the variability in the range of reasonable fair value estimates is not significant for that asset or (b) the probabilities of the various estimates within the range can be reasonably assessed and used in estimating fair value. If an entity is able to determine reliably the fair value of either the asset received or the asset given up, then the fair value of the asset given up is used to measure cost unless the fair value of the asset received is more clearly evident.

GRAP 102 includes reference to “cost or fair value” vs IAS 38 refers to “cost” only - GRAP 102 incorporates “fair value” when intangible asset acquired at no or for a nominal value and is therefore public sector specific amendment that will not affect the initial adoption of GRAP 102.

Internally generated goodwill

.44 Internally generated goodwill shall not be recognised as an asset.

Internally generated goodwill 48. Internally generated goodwill shall not be recognised

as an asset.

Paragraph similar.

.45 In some cases, expenditure is incurred to generate 49. In some cases, expenditure is incurred to generate

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GRAP 102 IAS 38 DIFFERENCES future economic benefits or service potential, but it does not result in the creation of an intangible asset that meets the recognition criteria in this Standard. Such expenditure is often described as contributing to internally generated goodwill. Internally generated goodwill is not recognised as an asset because it is not an identifiable resource (i.e. it is not separable nor does it arise from contractual rights (including rights arising from binding arrangements) or other legal rights (excluding rights granted by statute)) controlled by the entity that can be measured reliably at cost.

future economic benefits, but it does not result in the creation of an intangible asset that meets the recognition criteria in this Standard. Such expenditure is often described as contributing to internally generated goodwill. Internally generated goodwill is not recognised as an asset because it is not an identifiable resource (ie it is not separable nor does it arise from contractual or other legal rights) controlled by the entity that can be measured reliably at cost.

GRAP 102 incorporates concept of “service potential”. GRAP 102 has been expanded to include contractual rights arising from binding arrangements – SA public sector specific amendment.


.46 Differences between the value of an entity and the carrying amount of its identifiable net assets at any time may capture a range of factors that affect the value of the entity. However, such differences do not represent the cost of intangible assets controlled by the entity.

50. Differences between the market value of an entity and the carrying amount of its identifiable net assets at any time may capture a range of factors that affect the value of the entity. However, such differences do not represent the cost of intangible assets controlled by the entity.

Paragraph similar.

Internally generated intangible assets

.47 It is sometimes difficult to assess whether an internally generated intangible asset qualifies for recognition because of problems in:

(a) identifying whether and when there is an identifiable asset that will generate expected future economic benefits or service potential; and

(b) determining the cost of the asset reliably. In some cases, the cost of generating an intangible asset internally cannot be distinguished from the cost of maintaining or enhancing the entity’s internally generated goodwill or of running day-to-day operations.

Therefore, in addition to complying with the general requirements for the recognition and initial measurement of an intangible asset, an entity applies the requirements and guidance in paragraphs .48 to .70 to all internally generated intangible assets.

Internally generated intangible assets 51. It is sometimes difficult to assess whether an internally

generated intangible asset qualifies for recognition because of problems in:

(a) identifying whether and when there is an

identifiable asset that will generate expected future economic benefits; and

(b) determining the cost of the asset reliably. In

some cases, the cost of generating an intangible asset internally cannot be distinguished from the cost of maintaining or enhancing the entity’s internally generated goodwill or of running day-to-day operations.

Therefore, in addition to complying with the general requirements for the recognition and initial measurement of an intangible asset, an entity applies the requirements and guidance in paragraphs 52–67 to all internally generated intangible assets.

Similar. (a) - GRAP 102 incorporates concept of “service potential”. (b) - paragraph similar. Similar.

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GRAP 102 IAS 38 DIFFERENCES .48 To assess whether an internally generated intangible

asset meets the criteria for recognition, an entity classifies the generation of the asset into:

(a) a research phase; and

(b) a development phase.

Although the terms ‘research’ and ‘development’ are defined, the terms ‘research phase’ and ‘development phase’ have a broader meaning for the purpose of this Standard.

52. To assess whether an internally generated intangible asset meets the criteria for recognition, an entity classifies the generation of the asset into:

(a) a research phase; and

(b) a development phase.

Although the terms ‘research’ and ‘development’ are defined, the terms ‘research phase’ and ‘development phase’ have a broader meaning for the purpose of this Standard.

Paragraph similar.

.49 If an entity cannot distinguish the research phase from the development phase of an internal project to create an intangible asset, the entity treats the expenditure on that project as if it was incurred in the research phase only.

53. If an entity cannot distinguish the research phase from the development phase of an internal project to create an intangible asset, the entity treats the expenditure on that project as if it were incurred in the research phase only.

Paragraph similar.

Research phase

.50 No intangible asset arising from research (or from the research phase of an internal project) shall be recognised. Expenditure on research (or on the research phase of an internal project) shall be recognised as an expense when it is incurred.

Research phase 54. No intangible asset arising from research (or from the

research phase of an internal project) shall be recognised. Expenditure on research (or on the research phase of an internal project) shall be recognised as an expense when it is incurred.

Paragraph similar.

.51 In the research phase of an internal project, an entity cannot demonstrate that an intangible asset exists that will generate probable future economic benefits or service potential. Therefore, this expenditure is recognised as an expense when it is incurred.

55. In the research phase of an internal project, an entity cannot demonstrate that an intangible asset exists that will generate probable future economic benefits. Therefore, this expenditure is recognised as an expense when it is incurred.


.52 Examples of research activities are:

(a) activities aimed at obtaining new knowledge;

(b) the search for, evaluation and final selection of, applications or research findings or other knowledge;

(c) the search for alternatives for materials, devices, products, processes, systems or

56. Examples of research activities are:

(a) activities aimed at obtaining new knowledge;

(b) the search for, evaluation and final selection of, applications of research findings or other knowledge;

(c) the search for alternatives for materials,

Examples in (a) to (d) similar.

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GRAP 102 IAS 38 DIFFERENCES services; and

(d) the formulation, design, evaluation and final selection of possible alternatives for new or improved materials, devices, products, processes, systems or services.

devices, products, processes, systems or services; and

(d) the formulation, design, evaluation and final selection of possible alternatives for new or improved materials, devices, products, processes, systems or services.

Development phase

.53 An intangible asset arising from development (or from the development phase of an internal project) shall be recognised if, and only if, an entity can demonstrate all of the following:

(a) the technical feasibility of completing the intangible asset so that it will be available for use or sale.

(b) its intention to complete the intangible asset and use or sell it.

(c) its ability to use or sell the intangible asset.

(d) how the intangible asset will generate probable future economic benefits or service potential. Among other things, the entity can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset.

(e) the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset.

(f) its ability to measure reliably the expenditure attributable to the intangible asset during its development.

Development phase 57. An intangible asset arising from development (or from

the development phase of an internal project) shall be recognised if, and only if, an entity can demonstrate all of the following:

(a) the technical feasibility of completing the

intangible asset so that it will be available for use or sale.

(b) its intention to complete the intangible asset

and use or sell it. (c) its ability to use or sell the intangible asset. (d) how the intangible asset will generate

probable future economic benefits. Among other things, the entity can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset.

(e) the availability of adequate technical, financial

and other resources to complete the development and to use or sell the intangible asset.

(f) its ability to measure reliably the expenditure

attributable to the intangible asset during its development.

Similar. (a) to (c) and (e) and (f) – similar. (d) - incorporates concept of “service potential” but principle similar.

.54 In the development phase of an internal project, an entity can, in some instances, identify an intangible asset and demonstrate that the asset will generate

58. In the development phase of an internal project, an entity can, in some instances, identify an intangible asset and demonstrate that the asset will generate


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GRAP 102 IAS 38 DIFFERENCES probable future economic benefits or service potential. This is because the development phase of a project is further advanced than the research phase.

probable future economic benefits. This is because the development phase of a project is further advanced than the research phase.

.55 Examples of development activities are:

(a) the design, construction and testing of pre-production or pre-use prototypes and models;

(b) the design of tools, jigs, moulds and dies involving new technology;

(c) the design, construction and operation of a pilot plant that is not of a scale economically feasible for commercial production; and

(d) the design, construction and testing of a chosen alternative for new or improved materials, devices, products, processes, systems or services.

59. Examples of development activities are:

(a) the design, construction and testing of pre-production or pre-use prototypes and models;

(b) the design of tools, jigs, moulds and dies involving new technology;

(c) the design, construction and operation of a pilot plant that is not of a scale economically feasible for commercial production; and

(d) the design, construction and testing of a chosen alternative for new or improved materials, devices, products, processes, systems or services.

Examples similar.

.56 An example of research and development costs is where the department of defence conducts research into, and subsequently develops, a weapon system. Research costs include costs incurred to evaluate alternative systems, the formulation of a proposed system, the design and finalisation of a possible system. Development costs include the actual design, testing and development of a particular weapon system. Costs are recognised from the point that it is concluded that the development will be successful.

Additional example included in GRAP 102 to explain applicability to SA public sector – additional example will not affect the initial adoption of GRAP 102.

.57 To demonstrate how an intangible asset will generate probable future economic benefits or service potential, an entity assesses the future economic benefits or service potential to be received from the asset using the principles in the Standards of GRAP on Impairment of Assets. If the asset will generate economic benefits or service potential only in combination with other assets, the entity applies the concept of cash-generating units in the Standards of GRAP on Impairment of Assets.

60. To demonstrate how an intangible asset will generate probable future economic benefits, an entity assesses the future economic benefits to be received from the asset using the principles in IAS 36 Impairment of Assets. If the asset will generate economic benefits only in combination with other assets, the entity applies the concept of cash-generating units in IAS 36.

GRAP 102 incorporates concept of “service potential”. GRAP 102 requires entities to also apply concept of cash-generating units in the Standards of GRAP on Impairment of Asset – SA public sector specific amendment.

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GRAP 102 IAS 38 DIFFERENCES .58 Availability of resources to complete, use and obtain

the benefits from an intangible asset can be demonstrated by, for example, a strategic plan showing the technical, financial and other resources needed and the entity’s ability to secure those resources. In some cases, an entity demonstrates the availability of external finance by obtaining a lender’s indication of its willingness to fund the plan.

61. Availability of resources to complete, use and obtain the benefits from an intangible asset can be demonstrated by, for example, a business plan showing the technical, financial and other resources needed and the entity’s ability to secure those resources. In some cases, an entity demonstrates the availability of external finance by obtaining a lender’s indication of its willingness to fund the plan.

Terminology differences (strategic plan vs business plan) - principles in GRAP 102 and IAS 38 therefore no affect on initial adoption of GRAP 102.

.59 An entity’s costing systems can often measure reliably the cost of generating an intangible asset internally, such as salary and other expenditure incurred in securing copyrights or licences or developing computer software.

62. An entity’s costing systems can often measure reliably the cost of generating an intangible asset internally, such as salary and other expenditure incurred in securing copyrights or licences or developing computer software.

Paragraph similar.

Web site costs

.60 An entity may incur internal expenditure on the development and operation of its own web site for internal or external access. A web site designed for external access may be used for various purposes, such as to promote and advertise an entity’s own products and services, to provide electronic services, to sell products and services and to list approved supplier details. A web site designed for internal access may be used to store entity policies and customer details, and search relevant information.

Guidance on web site costs has been included in GRAP 102 from SIC Interpretation 32 Intangible Assets – Web Site Costs – SA public sector specific amendment but principles in GRAP 102 and IAS interpretation similar therefore no affect on initial adoption of GRAP 102.

.61 An entity’s own web site that arises from development and is for internal or external access, is an internally generated intangible asset that is subject to the requirements of this Standard.


.62 A web site arising from development should be

recognised as an intangible asset if, and only if, in addition to complying with the general requirements described in paragraph .24 for recognition and initial measurement, an entity can satisfy the requirements in paragraph .53. In particular, an entity may be able to satisfy the requirement to demonstrate how its web site will generate probable future economic benefits or service potential in accordance with paragraph .53(d)


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GRAP 102 IAS 38 DIFFERENCES when, for example, the web site is used for increased service delivery when used by taxpayers to submit tax returns electronically. When an entity is not able to demonstrate how a web site developed to comply with a statute or to be used primarily in providing information to the public at large on the generation of future economic benefits or service potential, all expenditure on developing such a web site should be recognised as an expense when incurred.

.63 Any internal expenditure on the development and

operation of an entity’s own web site should be accounted for in accordance with this Standard. The nature of each activity for which expenditure is incurred (e.g. training employees and maintaining the web site) and the web site’s stage of development or post-development, that includes the planning stage, application and infrastructure development, graphic design development and content development, should be evaluated to determine the appropriate accounting treatment (additional guidance is provided in Appendix B). For example:

(a) the planning stage is similar in nature to the research phase in paragraphs .50 to .52. Expenditure incurred in this stage should be recognised as an expense when it is incurred;

(b) the application and infrastructure development stage, the graphic design stage and the content development stage, to the extent that content is developed for purposes other than to advertise and promote an entity’s own products and services, are similar in nature to the development phase in paragraphs .53 to .59 and .64 to .67. Expenditure incurred in these stages should be included in the cost of a web site recognised as an intangible asset when the expenditure can be directly attributed and is necessary to creating, producing or preparing the web site for it to be capable of operating in the manner intended by management. For example, expenditure on purchasing or creating content (other than content that advertises and promotes an entity’s own products and services) specifically for a web site,


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GRAP 102 IAS 38 DIFFERENCES or expenditure to enable use of the content (e.g. a fee for acquiring a user number) on the web site, should be included in the cost of development when this condition is met. However, in accordance with paragraph .74, expenditure on an intangible item that was initially recognised as an expense in previous financial statements should not be recognised as part of the cost of an intangible asset at a later date;

(c) expenditure incurred in the content development stage, to the extent that content is developed to advertise and promote an entity’s own products and services (e.g. digital photographs of products and services), should be recognised as an expense when incurred in accordance with paragraph .72(c). For example, when accounting for expenditure on professional services for taking digital photographs of an entity’s own products or services provided and for enhancing the entity’s service delivery, expenditure should be recognised as an expense as the professional services are received during the process, not when the digital photographs are displayed on the web site; and

(d) the operating stage begins once development of a web site is complete. Expenditure incurred in this stage should be recognised as an expense when it is incurred unless it meets the recognition criteria in paragraph .24.


.64 Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance shall not be recognised as intangible assets.

63. Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance shall not be recognised as intangible assets.

Paragraph similar.

.65 Expenditure on internally generated brands, mastheads, publishing titles, customer lists and items similar in substance cannot be distinguished from the cost of developing the operation as a whole. Therefore, such items are not recognised as intangible assets.

64. Expenditure on internally generated brands, mastheads, publishing titles, customer lists and items similar in substance cannot be distinguished from the cost of developing the business as a whole. Therefore, such items are not recognised as intangible assets.

Terminology differences (operations vs business) – principles in GRAP 102 and IAS 38 therefore no affect on initial adoption of GRAP 102. Rest of paragraph similar.

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GRAP 102 IAS 38 DIFFERENCES .66 For example, a municipality develops a database of

property owners that will be used to determine who owns the property within the municipality’s jurisdiction. The database will allow the municipality to deliver services more effectively. The expenditure incurred during the development of the database cannot be distinguished from the cost incurred by the municipality to meet the statutory obligation. The development of the database of property owners is complying with the requirement of the statute. Such costs should be recognised as an expense rather than an intangible asset in accordance with paragraph .64.


.67 Another example will be where the department of defence maps the coastline and ocean beds surrounding the South African coast. The information obtained will be used by the department to deliver a better and more effective service. The costs to develop and prepare these maps should be recognised as an expense rather than as an intangible asset. However, copies of these maps can also be held for sale by the department, in which case the Standard of GRAP on Inventories should be applied.


Cost of an internally generated intangible asset

.68 The cost of an internally generated intangible asset for the purpose of paragraphs .28 and .29 is the sum of expenditure incurred from the date when the intangible asset first meets the recognition criteria in paragraphs .24, .25 and .53. Paragraph .74 prohibits reinstatement of expenditure previously recognised as an expense.

Cost of an internally generated intangible asset 65. The cost of an internally generated intangible asset for

the purpose of paragraph 24 is the sum of expenditure incurred from the date when the intangible asset first meets the recognition criteria in paragraphs 21, 22 and 57. Paragraph 71 prohibits reinstatement of expenditure previously recognised as an expense.

Paragraph similar.

.69 The cost of an internally generated intangible asset comprises all directly attributable costs necessary to create, produce, and prepare the asset to be capable of operating in the manner intended by management. Examples of directly attributable costs are:

(a) costs of materials and services used or consumed in generating the intangible asset;

(b) costs of employee benefits (as defined in the Standard of GRAP on Employee Benefits) arising from the generation of the intangible

66. The cost of an internally generated intangible asset comprises all directly attributable costs necessary to create, produce, and prepare the asset to be capable of operating in the manner intended by management. Examples of directly attributable costs are:

(a) costs of materials and services used or consumed in generating the intangible asset;

(b) costs of employee benefits (as defined in IAS

Paragraph similar. (a) to (d) – similar.

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GRAP 102 IAS 38 DIFFERENCES asset;

(c) fees to register a legal right; and

(d) amortisation of patents and licences that are used to generate the intangible asset.

The Standard of GRAP on Borrowing Costs specifies criteria for the recognition of interest as an element of the cost of an internally generated intangible asset.

19 Employee Benefits) arising from the generation of the intangible asset;

(c) fees to register a legal right; and

(d) amortisation of patents and licences that are used to generate the intangible asset.

IAS 23 Borrowing Costs specifies criteria for the recognition of interest as an element of the cost of an internally generated intangible asset.

.70 The following are not components of the cost of an

internally generated intangible asset:

(a) selling, administrative and other general overhead expenditure unless this expenditure can be directly attributed to preparing the asset for use;

(b) identified inefficiencies and initial operating losses incurred before the asset achieves planned performance; and

(c) expenditure on training staff to operate the asset.

67. The following are not components of the cost of an internally generated intangible asset:

(a) selling, administrative and other general overhead expenditure unless this expenditure can be directly attributed to preparing the asset for use;

(b) identified inefficiencies and initial operating losses incurred before the asset achieves planned performance; and

(c) expenditure on training staff to operate the asset.

Paragraph similar. (a) to (c) – sub-paragraphs similar.

Example illustrating paragraph .68

An entity developed a new system to schedule court cases more effectively that will result in increased service delivery. During the financial year ending March 20X6, expenditure incurred for the development of the system was R1,000, of which R900 was incurred before 1 March 20X6 and R100 was incurred between 1 March 20X6 and 31 March 20X6. The entity is able to demonstrate that, at 1 March 20X6, the newly developed system met the criteria for recognition as an intangible asset. The recoverable service amount of the system (including future cash outflows to complete the development before it is available for use) is estimated to be R500.

Example illustrating paragraph 65

An entity is developing a new production process. During 20X5, expenditure ) incurred was CU1,000(a), of which CU900 was incurred before 1 December 20X5 and CU100 was incurred between 1 December 20X5 and 31 December 20X5. The entity is able to demonstrate that, at 1 December 20X5, the production process met the criteria for recognition as an intangible asset. The recoverable amount of the know-how embodied in the process (including future cash outflows to complete the process before it is available for use) is estimated to be CU500.

At the end of 20X5, the production process is recognised as an intangible asset at a cost of CU100 (expenditure incurred since the date when the recognition criteria

Example in GRAP 102 amended to be public sector specific but will not affect the initial adoption of GRAP 102 as the underlying principles in GRAP 102 and IAS 38 similar.

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GRAP 102 IAS 38 DIFFERENCES At the end of the financial year, the developed system is recognised as an intangible asset at a cost of R100 (expenditure incurred since the date when the recognition criteria were met, i.e. 1 March 20X6). The R900 expenditure incurred before 1 March 20X6 is recognised as an expense because the recognition criteria were not met until 1 March 20X6. This expenditure does not form part of the cost of the system recognised in the statement of financial position. During the financial year ending 31 March 20X7, expenditure incurred is R2,000. At the end of this financial year, the recoverable service amount of the system (including future cash outflows to complete the system before it is available for use) is estimated to be R1,900. At the end of the 20X7 financial year, the cost of the developed system is R2,100 (R100 expenditure recognised at the end of 20X6 plus R2,000 expenditure recognised in the 20X6 financial year). The entity recognises an impairment loss of R200 to adjust the carrying amount of the developed system before impairment loss (R2,100) to its recoverable service amount (R1,900). This impairment loss will be reversed in a subsequent period if the requirements for the reversal of an impairment loss in the Standards of GRAP on Impairment of Assets are met.

were met, ie 1 December 20X5). The CU900 expenditure incurred before 1 December 20X5 is recognised as an expense because the recognition criteria were not met until 1 December 20X5. This expenditure does not form part of the cost of the production process recognised in the balance sheet.

During 20X6, expenditure incurred is CU2,000. At the end of 20X6, the recoverable amount of the know-how embodied in the process (including future cash outflows to complete the process before it is available for use) is estimated to be CU1,900.

At the end of 20X6, the cost of the production process is CU2,100 (CU100 expenditure recognised at the end of 20X5 plus CU2,000 expenditure recognised in 20X6). The entity recognises an impairment loss of CU200 to adjust the carrying amount of the process before impairment loss (CU2,100) to its recoverable amount (CU1,900). This impairment loss will be reversed in a subsequent period if the requirements for the reversal of an impairment loss in IAS 36 are met.

Recognition of an expense Recognition of an expense .71 Expenditure on an intangible item shall be recognised

as an expense when it is incurred unless it forms part of the cost of an intangible asset that meets the recognition criteria (see paragraphs .21 to .70).

68. Expenditure on an intangible item shall be recognised as an expense when it is incurred unless:

(a) it forms part of the cost of an intangible asset that meets the recognition criteria (see paragraphs 18–67); or

(b) the item is acquired in a business combination and cannot be recognised as an intangible asset. If this is the case, this expenditure (included in the cost of the business combination) shall form part of the amount

GRAP 102.71 and IAS 38.68(a) – similar. (b) - GRAP 102 excludes guidance on accounting for intangible assets acquired as part of an entity combination and in-process research and development costs acquired in an entity combination, as the Board has not yet considered the applicability of entity combinations to the South African public sector – SA public sector specific amendment.

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GRAP 102 IAS 38 DIFFERENCES attributed to goodwill at the acquisition date (see IFRS 3 Business Combinations).

.72 In some cases, expenditure is incurred to provide future economic benefits or service potential to an entity, but no intangible asset or other asset is acquired or created that can be recognised. In these cases, the expenditure is recognised as an expense when it is incurred. For example, expenditure on research is recognised as an expense when it is incurred (see paragraph .50). Other examples of expenditure that is recognised as an expense when it is incurred include:

(a) expenditure on start-up activities (i.e. start-up costs), unless this expenditure is included in the cost of an item of property, plant and equipment in accordance with the Standard of GRAP in Property, Plant and Equipment. Start-up costs may consist of establishment costs such as legal and secretarial costs incurred in establishing a legal entity, expenditure to open a new facility or operation (i.e. pre-opening costs) or expenditures for starting new operations or launching new products or processes (i.e. pre-operating costs).

(b) expenditure on training activities.

(c) expenditure on advertising and promotional activities.

(d) expenditure on relocating or reorganising part or all of an entity.

69. In some cases, expenditure is incurred to provide future economic benefits to an entity, but no intangible asset or other asset is acquired or created that can be recognised. In these cases, the expenditure is recognised as an expense when it is incurred. For example, except when it forms part of the cost of a business combination, expenditure on research is recognised as an expense when it is incurred (see paragraph 54). Other examples of expenditure that is recognised as an expense when it is incurred include:

(a) expenditure on start-up activities (ie start-up costs), unless this expenditure is included in the cost of an item of property, plant and equipment in accordance with IAS 16 Property, Plant and Equipment. Start-up costs may consist of establishment costs such as legal and secretarial costs incurred in establishing a legal entity, expenditure to open a new facility or business (ie pre-opening costs) or expenditures for starting new operations or launching new products or processes (ie pre-operating costs).

(b) expenditure on training activities.

(c) expenditure on advertising and promotional activities.

(d) expenditure on relocating or reorganising part or all of an entity.

GRAP 102 incorporates concept of “service potential”. GRAP 102 excludes phrase “except when it forms part of the cost of a business combination” as business combinations excluded from GRAP 102. (a) - Terminology differences (operations vs business) – principles in GRAP 102 and IAS 38 therefore no affect on initial adoption of GRAP 102. (b) to (d) - similar.

.73 Paragraph .71 does not preclude recognising a prepayment as an asset when payment for the delivery of goods or services has been made in advance of the delivery of goods or the rendering of services.

70. Paragraph 68 does not preclude recognising a prepayment as an asset when payment for the delivery of goods or services has been made in advance of the delivery of goods or the rendering of services.

Paragraph similar.

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GRAP 102 IAS 38 DIFFERENCES Past expenses not to be recognised as an asset

.74 Expenditure on an intangible item that was initially recognised as an expense shall not be recognised as part of the cost of an intangible asset at a later date.

Past expenses not to be recognised as an asset 71. Expenditure on an intangible item that was initially

recognised as an expense shall not be recognised as part of the cost of an intangible asset at a later date.

Paragraph similar.

Measurement after recognition Measurement after recognition .75 An entity shall choose either the cost model in

paragraph .77 or the revaluation model in paragraph .78 as its accounting policy. If an intangible asset is accounted for using the revaluation model, all the other assets in its class shall also be accounted for using the same model, unless there is no active market for those assets.

72. An entity shall choose either the cost model in paragraph 74 or the revaluation model in paragraph 75 as its accounting policy. If an intangible asset is accounted for using the revaluation model, all the other assets in its class shall also be accounted for using the same model, unless there is no active market for those assets.

Paragraph similar.

.76 A class of intangible assets is a grouping of assets of a similar nature and use in an entity’s operations. The items within a class of intangible assets are revalued simultaneously to avoid selective revaluation of assets and the reporting of amounts in the financial statements representing a mixture of costs and values as at different dates.

73. A class of intangible assets is a grouping of assets of a similar nature and use in an entity’s operations. The items within a class of intangible assets are revalued simultaneously to avoid selective revaluation of assets and the reporting of amounts in the financial statements representing a mixture of costs and values as at different dates.

Paragraph similar.

Cost model .77 After initial recognition, an intangible asset shall be

carried at its cost less any accumulated amortisation and any accumulated impairment losses.

Cost model 74. After initial recognition, an intangible asset shall be

carried at its cost less any accumulated amortisation and any accumulated impairment losses.

Paragraph similar.

Revaluation model .78 After initial recognition, an intangible asset shall be

carried at a revalued amount, being its fair value at the date of the revaluation less any subsequent accumulated amortisation and any subsequent accumulated impairment losses. For the purpose of revaluations under this Standard, fair value shall be determined by reference to an active market. Revaluations shall be made with such regularity that at the reporting date the carrying amount of the asset does not differ materially from its fair value

Revaluation model 75. After initial recognition, an intangible asset shall be

carried at a revalued amount, being its fair value at the date of the revaluation less any subsequent accumulated amortisation and any subsequent accumulated impairment losses. For the purpose of revaluations under this Standard, fair value shall be determined by reference to an active market. Revaluations shall be made with such regularity that at the balance sheet date the carrying amount of the asset does not differ materially from its fair value.

Terminology differences (reporting date vs balance sheet date) - principles in GRAP 102 and IAS 38 therefore no affect on initial adoption of GRAP 102. Rest of paragraph similar.

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GRAP 102 IAS 38 DIFFERENCES .79 The revaluation model does not allow:

(a) the revaluation of intangible assets that have not previously been recognised as assets; or

(b) the initial recognition of intangible assets at amounts other than cost.

76. The revaluation model does not allow:

(a) the revaluation of intangible assets that have not previously been recognised as assets; or

(b) the initial recognition of intangible assets at amounts other than cost.

Paragraph similar.

.80 The revaluation model is applied after an asset has been initially recognised at cost. However, if only part of the cost of an intangible asset is recognised as an asset because the asset did not meet the criteria for recognition until part of the way through the process (see paragraph .68), the revaluation model may be applied to the whole of that asset.

77. The revaluation model is applied after an asset has been initially recognised at cost. However, if only part of the cost of an intangible asset is recognised as an asset because the asset did not meet the criteria for recognition until part of the way through the process (see paragraph 65), the revaluation model may be applied to the whole of that asset. Also, the revaluation model may be applied to an intangible asset that was received by way of a government grant and recognised at a nominal amount (see paragraph 44).

Last sentence in IAS not included in GRAP because government grants excluded from scope of GRAP 102 - no affect on initial adoption of GRAP 102 as underlying principles in GRAP 102 and IAS 38 similar. Rest of paragraph similar.

.81 It is uncommon for an active market with the characteristics described in paragraph .09 to exist for an intangible asset, although this may happen. For example, an active market may exist for freely transferable bus routes, fishing licences or production quotas. However, an active market cannot exist for brands, newspaper mastheads, music and film publishing rights, patents or trademarks, because each such asset is unique. Also, although intangible assets are bought and sold, contracts are negotiated between individual buyers and sellers, and transactions are relatively infrequent. For these reasons, the price paid for one asset may not provide sufficient evidence of the fair value of another. Moreover, prices are often not available to the public.

78. It is uncommon for an active market with the characteristics described in paragraph 8 to exist for an intangible asset, although this may happen. For example, in some jurisdictions, an active market may exist for freely transferable taxi licences, fishing licences or production quotas. However, an active market cannot exist for brands, newspaper mastheads, music and film publishing rights, patents or trademarks, because each such asset is unique. Also, although intangible assets are bought and sold, contracts are negotiated between individual buyers and sellers, and transactions are relatively infrequent. For these reasons, the price paid for one asset may not provide sufficient evidence of the fair value of another. Moreover, prices are often not available to the public.

GRAP 102 includes public sector specific examples to explain applicability to public sector - no affect on initial adoption of GRAP 102 as underlying principles in GRAP 102 and IAS 38 similar. Rest of paragraph similar.

.82 The frequency of revaluations depends on the volatility of the fair values of the intangible assets being revalued. If the fair value of a revalued asset differs materially from its carrying amount, a further revaluation is necessary. Some intangible assets may experience significant and volatile movements in fair value, thus necessitating annual revaluation. Such

79. The frequency of revaluations depends on the volatility of the fair values of the intangible assets being revalued. If the fair value of a revalued asset differs materially from its carrying amount, a further revaluation is necessary. Some intangible assets may experience significant and volatile movements in fair value, thus necessitating annual revaluation. Such

Paragraph similar.

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GRAP 102 IAS 38 DIFFERENCES frequent revaluations are unnecessary for intangible assets with only insignificant movements in fair value.

frequent revaluations are unnecessary for intangible assets with only insignificant movements in fair value.

.83 If an intangible asset is revalued, any accumulated amortisation at the date of the revaluation is either:

(a) restated proportionately with the change in the gross carrying amount of the asset so that the carrying amount of the asset after revaluation equals its revalued amount; or

(b) eliminated against the gross carrying amount of the asset and the net amount restated to the revalued amount of the asset.

80. If an intangible asset is revalued, any accumulated amortisation at the date of the revaluation is either:

(a) restated proportionately with the change in the gross carrying amount of the asset so that the carrying amount of the asset after revaluation equals its revalued amount; or

(b) eliminated against the gross carrying amount of the asset and the net amount restated to the revalued amount of the asset.

Paragraph similar. (a) and (b) – sub-paragraphs similar.

.84 If an intangible asset in a class of revalued intangible assets cannot be revalued because there is no active market for this asset, the asset shall be carried at its cost less any accumulated amortisation and impairment losses.

81. If an intangible asset in a class of revalued intangible assets cannot be revalued because there is no active market for this asset, the asset shall be carried at its cost less any accumulated amortisation and impairment losses.

Paragraph similar.

.85 If the fair value of a revalued intangible asset can no longer be determined by reference to an active market, the carrying amount of the asset shall be its revalued amount at the date of the last revaluation by reference to the active market less any subsequent accumulated amortisation and any subsequent accumulated impairment losses.

82. If the fair value of a revalued intangible asset can no longer be determined by reference to an active market, the carrying amount of the asset shall be its revalued amount at the date of the last revaluation by reference to the active market less any subsequent accumulated amortisation and any subsequent accumulated impairment losses.

Paragraph similar.

.86 The fact that an active market no longer exists for a revalued intangible asset may indicate that the asset may be impaired and that it needs to be tested in accordance with the Standards of GRAP on Impairment of Assets.

83. The fact that an active market no longer exists for a revalued intangible asset may indicate that the asset may be impaired and that it needs to be tested in accordance with IAS 36 Impairment of Assets.

Paragraph similar.

.87 If the fair value of the asset can be determined by reference to an active market at a subsequent measurement date, the revaluation model is applied from that date.

84. If the fair value of the asset can be determined by reference to an active market at a subsequent measurement date, the revaluation model is applied from that date.

Paragraph similar.

.88 If an intangible asset’s carrying amount is increased as a result of a revaluation, the increase shall be credited directly to a revaluation surplus. However, the

85. If an intangible asset’s carrying amount is increased as a result of a revaluation, the increase shall be credited directly to equity under the heading of revaluation

Terminology differences (revaluation surplus and surplus or deficit vs equity under the heading revaluation surplus and

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GRAP 102 IAS 38 DIFFERENCES increase shall be recognised in surplus or deficit to the extent that it reverses a revaluation decrease of the same asset previously recognised in surplus or deficit.

surplus. However, the increase shall be recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in profit or loss.

profit or loss) – principles in GRAP 102 and IAS 38 therefore no affect on initial adoption of GRAP 102. Rest of paragraph similar.

.89 If an intangible asset’s carrying amount is decreased as a result of a revaluation, the decrease shall be recognised in surplus or deficit. However, the decrease shall be debited directly to a revaluation surplus to the extent of any credit balance in the revaluation surplus in respect of that asset.

86. If an intangible asset’s carrying amount is decreased as a result of a revaluation, the decrease shall be recognised in profit or loss. However, the decrease shall be debited directly to equity under the heading of revaluation surplus to the extent of any credit balance in the revaluation surplus in respect of that asset.

Terminology differences (revaluation surplus and surplus or deficit vs equity under the heading revaluation surplus and profit or loss) – principles in GRAP 102 and IAS 38 therefore no affect on initial adoption of GRAP 102. Rest of paragraph similar.

.90 The revaluation surplus included in net assets may be transferred directly to accumulated surpluses or deficits when the surplus is realised. The whole surplus may be realised on the retirement or disposal of the asset. However, some of the surplus may be realised as the asset is used by the entity; in such a case, the amount of the surplus realised is the difference between amortisation based on the revalued carrying amount of the asset and amortisation that would have been recognised based on the asset’s historical cost. The transfer from revaluation surplus to accumulated surpluses or deficits is not made through the statement of financial performance.

87. The cumulative revaluation surplus included in equity may be transferred directly to retained earnings when the surplus is realised. The whole surplus may be realised on the retirement or disposal of the asset. However, some of the surplus may be realised as the asset is used by the entity; in such a case, the amount of the surplus realised is the difference between amortisation based on the revalued carrying amount of the asset and amortisation that would have been recognised based on the asset’s historical cost. The transfer from revaluation surplus to retained earnings is not made through the income statement.

Terminology differences (net assets, accumulated surplus and statement of financial performance vs equity, retained earnings and income statement) – principles in GRAP 102 and IAS 38 therefore no affect on initial adoption of GRAP 102. Rest of paragraph similar.

Useful life Useful life .91 An entity shall assess whether the useful life or service

potential of an intangible asset is finite or indefinite and, if finite, the length of, or number of production or similar units constituting, that useful life. An intangible asset shall be regarded by the entity as having an indefinite useful life when, based on an analysis of all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows or service potential for the entity.

88. An entity shall assess whether the useful life of an intangible asset is finite or indefinite and, if finite, the length of, or number of production or similar units constituting, that useful life. An intangible asset shall be regarded by the entity as having an indefinite useful life when, based on an analysis of all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the entity.


.92 The accounting for an intangible asset is based on its useful life. An intangible asset with a finite useful life is amortised (see paragraphs .100 to .109), and an intangible asset with an indefinite useful life is not (see paragraphs .110 to.113). The illustrative examples accompanying this Standard illustrate the

89. The accounting for an intangible asset is based on its useful life. An intangible asset with a finite useful life is amortised (see paragraphs 97–106), and an intangible asset with an indefinite useful life is not (see paragraphs 107–110). The Illustrative Examples accompanying this Standard illustrate the

Paragraph similar.

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GRAP 102 IAS 38 DIFFERENCES determination of useful life for different intangible assets, and the subsequent accounting for those assets based on the useful life determinations.

determination of useful life for different intangible assets, and the subsequent accounting for those assets based on the useful life determinations.

.93 Many factors are considered in determining the useful

life of an intangible asset, including:

(a) the expected usage of the asset by the entity and whether the asset could be managed efficiently by another management team;

(b) typical product life cycles for the asset and public information on estimates of useful lives of similar assets that are used in a similar way;

(c) technical, technological, commercial or other types of obsolescence;

(d) the stability of the industry in which the asset operates and changes in the market demand for the products or services output from the asset;

(e) expected actions by competitors or potential competitors;

(f) the level of maintenance expenditure required to obtain the expected future economic benefits or service potential from the asset and the entity’s ability and intention to reach such a level;

(g) the period of control over the asset and legal or similar limits on the use of the asset, such as the expiry dates of related leases; and

(h) whether the useful life of the asset is dependent on the useful life of other assets of the entity.

90. Many factors are considered in determining the useful life of an intangible asset, including:

(a) the expected usage of the asset by the entity and whether the asset could be managed efficiently by another management team;

(b) typical product life cycles for the asset and public information on estimates of useful lives of similar assets that are used in a similar way;

(c) technical, technological, commercial or other types of obsolescence;

(d) the stability of the industry in which the asset operates and changes in the market demand for the products or services output from the asset;

(e) expected actions by competitors or potential competitors;

(f) the level of maintenance expenditure required to obtain the expected future economic benefits from the asset and the entity’s ability and intention to reach such a level;

(g) the period of control over the asset and legal or similar limits on the use of the asset, such as the expiry dates of related leases; and

(h) whether the useful life of the asset is dependent on the useful life of other assets of the entity.

(a) to (e) and (g) and (h) – sub-paragraphs similar. (f) - GRAP 102 incorporates concept of “service potential”.

.94 The term ‘indefinite’ does not mean ‘infinite’. The useful life of an intangible asset reflects only that level of future maintenance expenditure required to maintain

91. The term ‘indefinite’ does not mean ‘infinite’. The useful life of an intangible asset reflects only that level of future maintenance expenditure required to maintain

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GRAP 102 IAS 38 DIFFERENCES the asset at its standard of performance assessed at the time of estimating the asset’s useful life, and the entity’s ability and intention to reach such a level. A conclusion that the useful life of an intangible asset is indefinite should not depend on planned future expenditure in excess of that required to maintain the asset at that standard of performance.

the asset at its standard of performance assessed at the time of estimating the asset’s useful life, and the entity’s ability and intention to reach such a level. A conclusion that the useful life of an intangible asset is indefinite should not depend on planned future expenditure in excess of that required to maintain the asset at that standard of performance.

Paragraph similar.

.95 Given the history of rapid changes in technology, computer software and many other intangible assets are susceptible to technological obsolescence. Therefore, it is likely that their useful life is short.

92. Given the history of rapid changes in technology, computer software and many other intangible assets are susceptible to technological obsolescence. Therefore, it is likely that their useful life is short.

Paragraph similar.

.96 The useful life of an intangible asset may be very long or even indefinite. Uncertainty justifies estimating the useful life of an intangible asset on a prudent basis, but it does not justify choosing a life that is unrealistically short.

93. The useful life of an intangible asset may be very long or even indefinite. Uncertainty justifies estimating the useful life of an intangible asset on a prudent basis, but it does not justify choosing a life that is unrealistically short.

Paragraph similar.

.97 The useful life of an intangible asset that arises from contractual rights (including rights arising from binding arrangements) or other legal rights (excluding rights granted by statute) shall not exceed the period of the contractual or other legal rights, but may be shorter depending on the period over which the entity expects to use the asset. If the contractual rights (including rights arising from binding arrangements) or other legal rights (excluding rights granted by statute) are conveyed for a limited term that can be renewed, the useful life of the intangible asset shall include the renewal period(s) only if there is evidence to support renewal by the entity without significant cost.

94. The useful life of an intangible asset that arises from contractual or other legal rights shall not exceed the period of the contractual or other legal rights, but may be shorter depending on the period over which the entity expects to use the asset. If the contractual or other legal rights are conveyed for a limited term that can be renewed, the useful life of the intangible asset shall include the renewal period(s) only if there is evidence to support renewal by the entity without significant cost.

GRAP 102 has been expanded to include contractual rights arising from binding arrangements, and to exclude rights granted by statute – SA public sector specific amendment.


.98 There may be both economic and legal factors influencing the useful life of an intangible asset. Economic factors determine the period over which future economic benefits or service potential will be received by the entity. Legal factors may restrict the period over which the entity controls access to these benefits. The useful life is the shorter of the periods determined by these factors.

95. There may be both economic and legal factors influencing the useful life of an intangible asset. Economic factors determine the period over which future economic benefits will be received by the entity. Legal factors may restrict the period over which the entity controls access to these benefits. The useful life is the shorter of the periods determined by these factors.


.99 Existence of the following factors, among others, indicates that an entity would be able to renew the

96. Existence of the following factors, among others, indicates that an entity would be able to renew the

GRAP 102 has been expanded to include contractual rights arising from binding arrangements, and to exclude

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GRAP 102 IAS 38 DIFFERENCES contractual rights (including rights arising from binding arrangements) or other legal rights (excluding rights granted by statute) without significant cost:

(a) There is evidence, possibly based on experience, that the contractual rights (including rights arising from contractual arrangements) or other legal rights (excluding rights granted by statute) will be renewed. If renewal is contingent upon the consent of a third party, this includes evidence that the third party will give its consent.

(b) There is evidence that any conditions necessary to obtain renewal will be satisfied.

(c) The cost to the entity of renewal is not significant when compared with the future economic benefits or service potential expected to flow to the entity from renewal.

If the cost of renewal is significant when compared with the future economic benefits or service potential expected to flow to the entity from renewal, the ‘renewal’ cost represents, in substance, the cost to acquire a new intangible asset at the renewal date.

contractual or other legal rights without significant cost:

(a) there is evidence, possibly based on experience, that the contractual or other legal rights will be renewed. If renewal is contingent upon the consent of a third party, this includes evidence that the third party will give its consent;

(b) there is evidence that any conditions necessary to obtain renewal will be satisfied; and

(c) the cost to the entity of renewal is not significant when compared with the future economic benefits expected to flow to the entity from renewal.

If the cost of renewal is significant when compared with the future economic benefits expected to flow to the entity from renewal, the ‘renewal’ cost represents, in substance, the cost to acquire a new intangible asset at the renewal date.

rights granted by statute – SA public sector specific amendment.

(a) - GRAP 102 has been expanded to include contractual rights arising from binding arrangements, and to exclude rights granted by statute – SA public sector specific amendment.

(b) – similar.

(c) - GRAP 102 incorporates concept of “service potential”.

GRAP 102 incorporates concept of “service potential”.

Intangible assets with finite useful lives Intangible assets with finite useful lives Amortisation period and amortisation method .100 The depreciable amount of an intangible asset with a

finite useful life shall be allocated on a systematic basis over its useful life. Amortisation shall begin when the asset is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. Amortisation shall cease at the earlier of the date that the asset is classified as held for sale (or included in a disposal group that is classified as held for sale) in accordance with the Standard of GRAP on Non-current Assets Held for Sale and Discontinued Operations and the date that the asset is derecognised. The amortisation method used shall reflect the pattern in which the asset’s future economic benefits or service potential are expected to be consumed by the entity. If that pattern cannot be

Amortisation period and amortisation method 97. The depreciable amount of an intangible asset with a

finite useful life shall be allocated on a systematic basis over its useful life. Amortisation shall begin when the asset is available for use, ie when it is in the location and condition necessary for it to be capable of operating in the manner intended by management. Amortisation shall cease at the earlier of the date that the asset is classified as held for sale (or included in a disposal group that is classified as held for sale) in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations and the date that the asset is derecognised. The amortisation method used shall reflect the pattern in which the asset’s future economic benefits are expected to be consumed by the entity. If that pattern cannot be determined reliably,

GRAP 102 incorporates concept of “service potential”.

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GRAP 102 IAS 38 DIFFERENCES determined reliably, the straight line method shall be used. The amortisation charge for each period shall be recognised in surplus or deficit unless this or another Standard permits or requires it to be included in the carrying amount of another asset.

the straight-line method shall be used. The amortisation charge for each period shall be recognised in profit or loss unless this or another Standard permits or requires it to be included in the carrying amount of another asset.

Terminology differences (surplus or deficit vs profit or loss) - principles in GRAP 102 and IAS 38 therefore no affect on initial adoption of GRAP 102. Rest of paragraph similar.

.101 A variety of amortisation methods can be used to allocate the depreciable amount of an asset on a systematic basis over its useful life. These methods include the straight line method, the diminishing balance method and the unit of production method. The method used is selected on the basis of the expected pattern of consumption of the expected future economic benefits or service potential embodied in the asset and is applied consistently from period to period, unless there is a change in the expected pattern of consumption of those future economic benefits or service potential. There is rarely, if ever, persuasive evidence to support an amortisation method for intangible assets with finite useful lives that results in a lower amount of accumulated amortisation than under the straight line method.

98. A variety of amortisation methods can be used to allocate the depreciable amount of an asset on a systematic basis over its useful life. These methods include the straight-line method, the diminishing balance method and the unit of production method. The method used is selected on the basis of the expected pattern of consumption of the expected future economic benefits embodied in the asset and is applied consistently from period to period, unless there is a change in the expected pattern of consumption of those future economic benefits. There is rarely, if ever, persuasive evidence to support an amortisation method for intangible assets with finite useful lives that results in a lower amount of accumulated amortisation than under the straight-line method.


.102 Amortisation is usually recognised in surplus or deficit. However, sometimes the future economic benefits or service potential embodied in an asset are absorbed in producing other assets. In this case, the amortisation charge constitutes part of the cost of the other asset and is included in its carrying amount. For example, the amortisation of intangible assets used in a production process is included in the carrying amount of inventories (see the Standard of GRAP on Inventories).

99. Amortisation is usually recognised in profit or loss. However, sometimes the future economic benefits embodied in an asset are absorbed in producing other assets. In this case, the amortisation charge constitutes part of the cost of the other asset and is included in its carrying amount. For example, the amortisation of intangible assets used in a production process is included in the carrying amount of inventories (see IAS 2 Inventories).

Terminology differences (surplus or deficit vs profit or loss) - principles in GRAP 102 and IAS 38 no affect on initial adoption of GRAP 102. GRAP 102 incorporates concept of “service potential”. Rest of paragraph similar.

Residual value

.103 The residual value of an intangible asset with a finite useful life shall be assumed to be zero unless:

(a) there is a commitment by a third party to purchase the asset at the end of its useful life; or

(b) there is an active market for the asset and:

Residual value 100. The residual value of an intangible asset with a finite

useful life shall be assumed to be zero unless:

(a) there is a commitment by a third party to purchase the asset at the end of its useful life; or

(b) there is an active market for the asset and:

Paragraph similar. (a) to (b) – sub-pargraphs similar.

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GRAP 102 IAS 38 DIFFERENCES (i) residual value can be determined by

reference to that market; and

(ii) it is probable that such a market will exist at the end of the asset’s useful life.

(i) residual value can be determined by

reference to that market; and

(ii) it is probable that such a market will exist at the end of the asset’s useful life.

.104 The depreciable amount of an asset with a finite

useful life is determined after deducting its residual value. A residual value other than zero implies that an entity expects to dispose of the intangible asset before the end of its economic life.

101. The depreciable amount of an asset with a finite useful life is determined after deducting its residual value. A residual value other than zero implies that an entity expects to dispose of the intangible asset before the end of its economic life.

Paragraph similar.

.105 An estimate of an asset’s residual value is based on the amount recoverable from disposal using prices prevailing at the date of the estimate for the sale of a similar asset that has reached the end of its useful life and has operated under conditions similar to those in which the asset will be used. The residual value is reviewed at least at each reporting date. A change in the asset’s residual value is accounted for as a change in an accounting estimate in accordance with the Standard of GRAP on Accounting Policies, Changes in Accounting Estimates and Errors.

102. An estimate of an asset’s residual value is based on the amount recoverable from disposal using prices prevailing at the date of the estimate for the sale of a similar asset that has reached the end of its useful life and has operated under conditions similar to those in which the asset will be used. The residual value is reviewed at least at each financial year-end. A change in the asset’s residual value is accounted for as a change in an accounting estimate in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

Terminology differences (reporting period vs financial year-end) - principles in GRAP 102 and IAS 38 therefore no affect on initial adoption of GRAP 102. Rest of paragraph similar.

.106 The residual value of an intangible asset may increase to an amount equal to or greater than the asset’s carrying amount. If it does, the asset’s amortisation charge is zero unless and until its residual value subsequently decreases to an amount below the asset’s carrying amount.

103. The residual value of an intangible asset may increase to an amount equal to or greater than the asset’s carrying amount. If it does, the asset’s amortisation charge is zero unless and until its residual value subsequently decreases to an amount below the asset’s carrying amount.

Paragraph similar.

Review of amortization period and amortization method .107 The amortisation period and the amortisation method

for an intangible asset with a finite useful life shall be reviewed at least at each reporting date. If the expected useful life of the asset is different from previous estimates, the amortisation period shall be changed accordingly. If there has been a change in the expected pattern of consumption of the future economic benefits or service potential embodied in the asset, the amortisation method shall be changed

Review of amortisation period and amortisation method 104. The amortisation period and the amortisation method

for an intangible asset with a finite useful life shall be reviewed at least at each financial year-end. If the expected useful life of the asset is different from previous estimates, the amortisation period shall be changed accordingly. If there has been a change in the expected pattern of consumption of the future economic benefits embodied in the asset, the


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GRAP 102 IAS 38 DIFFERENCES to reflect the changed pattern. Such changes shall be accounted for as changes in accounting estimates in accordance with the Standard of GRAP on Accounting Policies, Changes in Accounting Estimates and Errors.

amortisation method shall be changed to reflect the changed pattern. Such changes shall be accounted for as changes in accounting estimates in accordance with IAS 8.

.108 During the life of an intangible asset, it may become apparent that the estimate of its useful life is inappropriate. For example, the recognition of an impairment loss may indicate that the amortisation period needs to be changed.

105. During the life of an intangible asset, it may become apparent that the estimate of its useful life is inappropriate. For example, the recognition of an impairment loss may indicate that the amortisation period needs to be changed.

Paragraph similar.

.109 Over time, the pattern of future economic benefits or service potential expected to flow to an entity from an intangible asset may change. For example, it may become apparent that a diminishing balance method of amortisation is appropriate rather than a straight line method. Another example is if use of the rights represented by a licence is deferred pending action on other components of the business plan. In this case, economic benefits or service potential that flow from the asset may not be received until later periods.

106. Over time, the pattern of future economic benefits expected to flow to an entity from an intangible asset may change. For example, it may become apparent that a diminishing balance method of amortisation is appropriate rather than a straight-line method. Another example is if use of the rights represented by a licence is deferred pending action on other components of the business plan. In this case, economic benefits that flow from the asset may not be received until later periods.


Intangible assets with indefinite useful lives Intangible assets with indefinite useful lives .110 An intangible asset with an indefinite useful life shall

not be amortised.

107. An intangible asset with an indefinite useful life shall not be amortised.

Paragraph similar.

.111 In accordance with the Standards of GRAP on Impairment of Assets, an entity is required to test an intangible asset with an indefinite useful life for impairment by comparing its recoverable amount and recoverable service amount with its carrying amount

(a) annually, and

(b) whenever there is an indication that the intangible asset may be impaired.

108. In accordance with IAS 36 Impairment of Assets, an entity is required to test an intangible asset with an indefinite useful life for impairment by comparing its recoverable amount with its carrying amount

(a) annually, and

(b) whenever there is an indication that the intangible asset may be impaired.

GRAP distinguish between impairment loss of cash-generating and non-cash-generating assets – public sector specific difference. (a) and (b) – sub-paragraphs similar.

Review of useful life assessment .112 The useful life of an intangible asset that is not

being amortised shall be reviewed each period to determine whether events and circumstances

Review of useful life assessment 109. The useful life of an intangible asset that is not being

amortised shall be reviewed each period to determine

Paragraph similar.

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GRAP 102 IAS 38 DIFFERENCES continue to support an indefinite useful life assessment for that asset. If they do not, the change in the useful life assessment from indefinite to finite shall be accounted for as a change in an accounting estimate in accordance with the Standard of GRAP on Accounting Policies, Changes in Accounting Estimates and Errors.

whether events and circumstances continue to support an indefinite useful life assessment for that asset. If they do not, the change in the useful life assessment from indefinite to finite shall be accounted for as a change in an accounting estimate in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

.113 In accordance with the Standards of GRAP on Impairment of Assets, reassessing the useful life of an intangible asset as finite rather than indefinite is an indicator that the asset may be impaired. As a result, the entity tests the asset for impairment by comparing its recoverable amount or recoverable service amount, determined in accordance with the Standards of GRAP on Impairment of Assets, with its carrying amount, and recognising any excess of the carrying amount over the recoverable amount or recoverable service amount as an impairment loss.

1. In accordance with IAS 36, reassessing the useful life of an intangible asset as finite rather than indefinite is an indicator that the asset may be impaired. As a result, the entity tests the asset for impairment by comparing its recoverable amount, determined in accordance with IAS 36, with its carrying amount, and recognising any excess of the carrying amount over the recoverable amount as an impairment loss.

GRAP distinguish between impairment loss of cash-generating and non-cash-generating assets – public sector specific difference. Rest of paragraph similar.

Recoverability of the carrying amount — impairment losses

Recoverability of the carrying amount — impairment losses

.114 To determine whether an intangible asset is impaired, an entity applies the Standards of GRAP on Impairment of Assets. That Standard explains when and how an entity reviews the carrying amount of its assets, how it determines the recoverable amount or recoverable service amount of an asset and when it recognises or reverses an impairment loss.

2. To determine whether an intangible asset is impaired, an entity applies IAS 36 Impairment of Assets. That Standard explains when and how an entity reviews the carrying amount of its assets, how it determines the recoverable amount of an asset and when it recognises or reverses an impairment loss.

GRAP distinguish between impairment loss of cash-generating and non-cash-generating assets – public sector specific difference. Rest of paragraph similar.

Retirements and disposals Retirements and disposals .115 An intangible asset shall be derecognised:

(a) on disposal; or

(b) when no future economic benefits or service potential are expected from its use or disposal.

112. An intangible asset shall be derecognised:

(a) on disposal; or

(b) when no future economic benefits are expected from its use or disposal.

Similar. (a) – similar. (b) - GRAP 102 incorporates concept of “service potential”.

.116 The gain or loss arising from the derecognition of an intangible asset shall be determined as the difference between the net disposal proceeds, if

113. The gain or loss arising from the derecognition of an intangible asset shall be determined as the difference between the net disposal proceeds, if any, and the

Terminology differences (surplus or deficit vs profit or loss) - principles in GRAP 102 and IAS 38 therefore no affect on initial adoption of GRAP 102.

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GRAP 102 IAS 38 DIFFERENCES any, and the carrying amount of the asset. It shall be recognised in surplus or deficit when the asset is derecognised (unless the Standard of GRAP on Leases requires otherwise on a sale and leaseback).

carrying amount of the asset. It shall be recognised in profit or loss when the asset is derecognised (unless IAS 17 Leases requires otherwise on a sale and leaseback). Gains shall not be classified as revenue.

GRAP 102 does not state “gains shall not be classified as revenue” because GRAP term “income” has a broader meaning than the term “revenue” – public sector specific amendment. Rest of paragraph similar.

.117 The disposal of an intangible asset may occur in a variety of ways (e.g. by sale, by entering into a finance lease, or by donation). In determining the date of disposal of such an asset, an entity applies the criteria in the Standard of GRAP on Revenue from Exchange Transactions and the Standard of GRAP on Revenue from Non-Exchange Transactions for recognising revenue from the sale of goods. The Standard of GRAP on Leases applies to disposal by a sale and leaseback.

114. The disposal of an intangible asset may occur in a variety of ways (eg by sale, by entering into a finance lease, or by donation). In determining the date of disposal of such an asset, an entity applies the criteria in IAS 18 Revenue for recognising revenue from the sale of goods. IAS 17 applies to disposal by a sale and leaseback.

GRAP 102 refers to GRAP Standard on Revenue from exchange and non-exchange transactions – public sector specific amendment. Rest of paragraph similar.

.118 If in accordance with the recognition principle in paragraph .24 an entity recognises in the carrying amount of an asset the cost of a replacement for part of an intangible asset, then it derecognises the carrying amount of the replaced part. If it is not practicable for an entity to determine the carrying amount of the replaced part, it may use the cost of the replacement as an indication of what the cost of the replaced part was at the time it was acquired or internally generated.

115. If in accordance with the recognition principle in paragraph 21 an entity recognises in the carrying amount of an asset the cost of a replacement for part of an intangible asset, then it derecognises the carrying amount of the replaced part. If it is not practicable for an entity to determine the carrying amount of the replaced part, it may use the cost of the replacement as an indication of what the cost of the replaced part was at the time it was acquired or internally generated.

Paragraph similar.

.119 The consideration receivable on disposal of an intangible asset is recognised initially at its fair value. If payment for the intangible asset is deferred, the consideration received is recognised initially at the cash price equivalent. The difference between the nominal amount of the consideration and the cash price equivalent is recognised as interest revenue in accordance with the Standard of GRAP on Revenue from Exchange Transactions reflecting the effective yield on the receivable.

116. The consideration receivable on disposal of an intangible asset is recognised initially at its fair value. If payment for the intangible asset is deferred, the consideration received is recognised initially at the cash price equivalent. The difference between the nominal amount of the consideration and the cash price equivalent is recognised as interest revenue in accordance with IAS 18 reflecting the effective yield on the receivable.

Paragraph similar.

.120 Amortisation of an intangible asset with a finite useful life does not cease when the intangible asset

117. Amortisation of an intangible asset with a finite useful life does not cease when the intangible asset is no

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GRAP 102 IAS 38 DIFFERENCES is no longer used, unless the asset has been fully depreciated or is classified as held for sale (or included in a disposal group that is classified as held for sale) in accordance with the Standard of GRAP on Non-current Assets Held for Sale and Discontinued Operations.

longer used, unless the asset has been fully depreciated or is classified as held for sale (or included in a disposal group that is classified as held for sale) in accordance with IFRS 5.

Paragraph similar.

Disclosure Disclosure General

.121 An entity shall disclose the following for each class of intangible assets, distinguishing between internally generated intangible assets and other intangible assets:

(a) Whether the useful lives are indefinite or finite and, if finite, the useful lives or the amortisation rates used.

(b) The amortisation methods used for intangible assets with finite useful lives.

(c) The gross carrying amount and any accumulated amortisation (aggregated with accumulated impairment losses) at the beginning and end of the period.

(d) The line item(s) of the statement of financial performance in which any amortisation of intangible assets is included.

(e) A reconciliation of the carrying amount at the beginning and end of the period showing:

(i) additions, indicating separately those from internal development and those acquired separately;

(ii) disposals;

(iii) assets classified as held for sale or included in a disposal group classified as held for sale in accordance with the Standard of GRAP on Non-current Assets Held for Sale and Discontinued

General 118. An entity shall disclose the following for each class of

intangible assets, distinguishing between internally generated intangible assets and other intangible assets:

(a) whether the useful lives are indefinite or finite

and, if finite, the useful lives or the amortisation rates used;

(b) the amortisation methods used for intangible

assets with finite useful lives; (c) the gross carrying amount and any

accumulated amortisation (aggregated with accumulated impairment losses) at the beginning and end of the period;

(d) the line item(s) of the income statement in

which any amortisation of intangible assets is included;

(e) a reconciliation of the carrying amount at the

beginning and end of the period showing:

(i) additions, indicating separately those from internal development, those acquired separately, and those acquired through business combinations;

(ii) assets classified as held for sale

or included in a disposal group classified as held for sale in accordance with IFRS 5 and

Similar. (a) to (c) – disclosure similar. (d) - Terminology differences (statement of financial performance vs income statement) - principles in GRAP 102 and IAS 38 therefore no affect on initial adoption of GRAP 102. (e) (i) – GRAP excludes reference to business combinations as it is excluded from scope of GRAP 102 – SA public sector specific amendment. GRAP 102(e)(ii) – additional but could be incorporated as part of (e)(iii). GRAP 102 (e) (iii), (vii) to (ix) similar to IAS 38 (e)(ii), (iv) to (viii). GRAP 102 (e)(iv) to (vi) vs IAS 38(e)(iii) o (iv) - terminology

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GRAP 102 IAS 38 DIFFERENCES Operations ;

(iv) increases or decreases during the period resulting from revaluations under paragraphs .78, .88 and .89 and from impairment losses recognised or reversed directly in net assets in accordance (if any) with the Standards of GRAP on Impairment of Assets;

(v) impairment losses recognised in surplus or deficit during the period in accordance (if any) with the Standards of GRAP on Impairment of Assets;

(vi) impairment losses reversed in surplus or deficit during the period in accordance (if any) with the Standards of GRAP on Impairment of Assets);

(vii) any amortisation recognised during the period;

(viii) net exchange differences arising on the translation of the financial statements into the presentation currency, and on the translation of a foreign operation into the presentation currency of the entity; and

(ix) other changes in the carrying amount during the period.

other disposals; (iii) increases or decreases during

the period resulting from revaluations under paragraphs 75, 85 and 86 and from impairment losses recognised or reversed directly in equity in accordance with IAS 36 Impairment of Assets (if any);

(iv) impairment losses recognised in

profit or loss during the period in accordance with IAS 36 (if any);

(iv) impairment losses reversed in

profit or loss during the period in accordance with IAS 36 (if any);

(vi) any amortisation recognised during

the period; (vii) net exchange differences arising on

the translation of the financial statements into the presentation currency, and on the translation of a foreign operation into the presentation currency of the entity; and

(viii) other changes in the carrying

amount during the period.

differences (net assets, surplus or deficit vs equity and profit or loss) - principles in GRAP 102 and IAS 38 therefore no affect on initial adoption of GRAP 102.

.122 A class of intangible assets is a grouping of assets of a similar nature and use in an entity’s operations. Examples of separate classes may include:

(a) mastheads and publishing titles;

(b) computer software;

(c) licences;

119. A class of intangible assets is a grouping of assets of a similar nature and use in an entity’s operations. Examples of separate classes may include:

(a) brand names;

(b) mastheads and publishing titles;

(c) computer software;

GRAP 102 includes additional examples of separate classes – will not affect the initial adoption of GRAP 102 as underlying principles in GRAP 102 and IAS 38 similar.

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GRAP 102 IAS 38 DIFFERENCES (d) copyrights, patents;

(e) service and operating rights;

(f) rights to use naturally occurring assets, for example the right to use water;

(g) formulae, models, designs and prototypes; and

(h) intangible assets under development.

The classes mentioned above are disaggregated (aggregated) into smaller (larger) classes if this results in more relevant information for the users of the financial statements.

(d) licences and franchises;

(e) copyrights, patents and other industrial property rights, service and operating rights;

(f) recipes, formulae, models, designs and prototypes; and

(g) intangible assets under development.

The classes mentioned above are disaggregated (aggregated) into smaller (larger) classes if this results in more relevant information for the users of the financial statements.

.123 An entity discloses information on impaired intangible

assets in accordance with the Standards of GRAP on Impairment of Assets in addition to the information required by paragraph .121(e)(iii) to (v).

120. An entity discloses information on impaired intangible assets in accordance with IAS 36 in addition to the information required by paragraph 118(e)(iii)–(v).

Disclosures similar.

.124 The Standard of GRAP on Accounting Policies, Changes in Accounting Estimates and Errors requires an entity to disclose the nature and amount of a change in an accounting estimate that has a material effect in the current period or is expected to have a material effect in subsequent periods. Such disclosure may arise from changes in:

(a) the assessment of an intangible asset’s useful life;

(b) the amortisation method; or

(c) residual values.

121. IAS 8 requires an entity to disclose the nature and amount of a change in an accounting estimate that has a material effect in the current period or is expected to have a material effect in subsequent periods. Such disclosure may arise from changes in:

(a) the assessment of an intangible asset’s useful life;

(b) the amortisation method; or

(c) residual values.

Disclosures similar. (a) to (c) – similar.

.125 An entity shall also disclose:

(a) for an intangible asset assessed as having an indefinite useful life, the carrying amount of that asset and the reasons supporting the assessment of an indefinite useful life. In giving these reasons, the entity shall describe the factor(s) that played a significant role in determining that the asset has an

122. An entity shall also disclose:

(a) for an intangible asset assessed as having an indefinite useful life, the carrying amount of that asset and the reasons supporting the assessment of an indefinite useful life. In giving these reasons, the entity shall describe the factor(s) that played a significant role in determining that the asset

GRAP 102 (a) to (d) similar to IAS 38 (a) to (c) and (e). IAS 38(d) not included in GRAP 102 as government grants excluded from scope of GRAP 102 as guidance to be included inn GRAP 23 - SA public sector specific amendment that will not affect the initial adoption of GRAP 102 as guidance will be included in GRAP 23.

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GRAP 102 IAS 38 DIFFERENCES indefinite useful life;

(b) a description, the carrying amount and remaining amortisation period of any individual intangible asset that is material to the entity’s financial statements;

(c) the existence and carrying amounts of intangible assets whose title is restricted and the carrying amounts of intangible assets pledged as security for liabilities; and

(d) the amount of contractual commitments for the acquisition of intangible assets.

has an indefinite useful life.

(b) a description, the carrying amount and remaining amortisation period of any individual intangible asset that is material to the entity’s financial statements.

(c) for intangible assets acquired by way of a government grant and initially recognised at fair value (see paragraph 44):

(i) the fair value initially recognised for these assets;

(ii) their carrying amount; and

(iii) whether they are measured after recognition under the cost model or the revaluation model.

(d) the existence and carrying amounts of intangible assets whose title is restricted and the carrying amounts of intangible assets pledged as security for liabilities.

(e) the amount of contractual commitments for the acquisition of intangible assets.

.126 When an entity describes the factor(s) that played a

significant role in determining that the useful life of an intangible asset is indefinite, the entity considers the list of factors in paragraph .93.

123. When an entity describes the factor(s) that played a significant role in determining that the useful life of an intangible asset is indefinite, the entity considers the list of factors in paragraph 90.


Intangible assets measured after recognition using the revaluation model

.127 If intangible assets are accounted for at revalued amounts, an entity shall disclose the following:

(a) By class of intangible assets:

(i) the effective date of the revaluation;

(ii) the carrying amount of revalued intangible assets; and

Intangible assets measured after recognition using the revaluation model 124. If intangible assets are accounted for at revalued

amounts, an entity shall disclose the following: (a) by class of intangible assets:

(i) the effective date of the revaluation;

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GRAP 102 IAS 38 DIFFERENCES (iii) the carrying amount that would have

been recognised had the revalued class of intangible assets been measured after recognition using the cost model in paragraph .77.

(b) The amount of the revaluation surplus that relates to intangible assets at the beginning and end of the period, indicating the changes during the period and any restrictions on the distribution of the balance to the owners of the net asset.

(c) The methods and significant assumptions applied in estimating the assets’ fair values.

(ii) the carrying amount of revalued intangible assets; and

(iii) the carrying amount that would have

been recognised had the revalued class of intangible assets been measured after recognition using the cost model in paragraph 74;

(b) the amount of the revaluation surplus that

relates to intangible assets at the beginning and end of the period, indicating the changes during the period and any restrictions on the distribution of the balance to shareholders; and

(c) the methods and significant assumptions

applied in estimating the assets’ fair values.

Disclosures similar except for terminology differences in (b) - (owners of the net assets vs shareholders) - – principles in GRAP 102 and IAS 38 therefore no affect on initial adoption of GRAP 102. Rest of disclosure similar.

.128 It may be necessary to aggregate the classes of revalued assets into larger classes for disclosure purposes. However, classes are not aggregated if this would result in the combination of a class of intangible assets that includes amounts measured under both the cost and revaluation models.

125. It may be necessary to aggregate the classes of revalued assets into larger classes for disclosure purposes. However, classes are not aggregated if this would result in the combination of a class of intangible assets that includes amounts measured under both the cost and revaluation models.


Research and development expenditure

.129 An entity shall disclose the aggregate amount of research and development expenditure recognised as an expense during the period.

Research and development expenditure

126. An entity shall disclose the aggregate amount of research and development expenditure recognised as an expense during the period.

Disclosure similar.

.130 Research and development expenditure comprises all expenditure that is directly attributable to research or development activities (see paragraphs .69 and .70 for guidance on the type of expenditure to be included for the purpose of the disclosure requirement in paragraph .129).

127. Research and development expenditure comprises all expenditure that is directly attributable to research or development activities (see paragraphs 66 and 67 for guidance on the type of expenditure to be included for the purpose of the disclosure requirement in paragraph 126).

Disclosure similar.

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GRAP 102 IAS 38 DIFFERENCES Other information

.131 An entity is encouraged, but not required, to disclose the following information:

(a) A description of any fully amortised intangible asset that is still in use.

(b) A brief description of significant intangible assets controlled by the entity but not recognised as assets because they did not meet the recognition criteria in this Standard.

Other information 128. An entity is encouraged, but not required, to disclose

the following information: (a) a description of any fully amortised intangible

asset that is still in use; and (b) a brief description of significant intangible

assets controlled by the entity but not recognised as assets because they did not meet the recognition criteria in this Standard or because they were acquired or generated before the version of IAS 38 Intangible Assets issued in 1998 was effective.

Similar. (a) - Disclosure similar. (b) – last part not applicable to public sector as effective date is determined by MoF.

Transitional provisions Transitional provisions and effective date .132 All provisions of this Standard shall be applied to

intangible assets held on or after the effective date of this Standard.

Initial adoption of accrual accounting

.133 Where an entity initially recognises intangible assets that meet the definition and recognition criteria of an intangible asset as set out in paragraphs .09 to .20 and .24 to .31, the entity shall report the effect of the initial recognition of intangible assets as an adjustment to the opening balance of accumulated surpluses or deficits for the period in which the Standard is first adopted.

Transitional provisions in paragraphs .133 to .137 not applicable to public entities.

.134 An entity that adopts accrual accounting in accordance with Standards of GRAP shall initially recognise intangible assets at cost or fair value. For intangible assets that were acquired at no cost, or for a nominal cost, cost is an intangible asset’s fair value as at the date of adoption of this Standard.

.135 When adopting this Standard, an entity may control intangible assets that were not previously recognised. This Standard allows entities to

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GRAP 102 IAS 38 DIFFERENCES recognise intangible assets initially at cost or fair value. Where intangible assets are initially recognised at cost and were acquired at no cost or for a nominal cost, cost will be determined by reference to the intangible asset’s fair value as at the date of adoption of this Standard. Where the cost of acquisition of the intangible assets is not known, its cost may be estimated by reference to its fair value as at the date of adoption of this Standard.

.136 An entity is exempt from applying the requirement in

paragraph .74, provided that previously expensed internally generated intangible assets meet the recognition and measurement criteria in paragraphs .21 and .24.

.137 If an internally generated intangible asset qualifies for recognition at the date of initial adoption of this Standard, an entity should recognise the internally generated intangible asset if the recognition and measurement criteria as determined in paragraphs .21 and .24 have been met, even if the entity had, prior to the initial adoption of this Standard, recognised the related expenditure as an expense in the statement of financial performance.

Initial adoption of Standard by entities already applying accrual accounting

.138 Entities that are aready applying accrual accounting shall apply the Standard of GRAP on Accounting Policies, Changes in Accounting Estimates and Errors when the initial adoption of the Standard results in a change in an accounting policy or estimate.

.139 On initial adoption of this Standard, an entity shall

derecognise previously recognised intangible assets that do not meet the recognition and measurement criteria in paragraphs .21 and .24. The entity shall report the effect of the derecognition as an adjustment to the opening balance of the accumulated surplus or deficit of the previous year in which the Standard is first adopted.

GRAP require retrospective application where accounting policy has changed on initial adoption of GRAP 102 that is in line with the Board’s agreed principle. A directive containing transitional provisions was issued for comment – the proposed transitional provisions require retrospective for application of GRAP 102 on initial adoption.

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GRAP 102 IAS 38 DIFFERENCES Effective date .140 An entity shall apply this Standard of GRAP for

annual financial statements covering periods beginning on or after a date to be determined by the Minister of Finance in a regulation to be published in accordance with section 91(1)(b) of the Public Finance Management Act, Act No. 1 of 1999, as amended.

Standard paragraph in Standards of GRAP.

129. If an entity elects in accordance with paragraph 85 of IFRS 3 Business Combinations to apply IFRS 3 from any date before the effective dates set out in paragraphs 78-84 of IFRS 3, it also shall apply this Standard prospectively from that same date. Thus, the entity shall not adjust the carrying amount of intangible assets recognised at that date. However, the entity shall, at that date, apply this Standard to reassess the useful lives of its recognised intangible assets. If, as a result of that reassessment, the entity changes its assessment of the useful life of an asset, that change shall be accounted for as a change in an accounting estimate in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

Guidance not applicable to SA GRAPs.

130. Otherwise, an entity shall apply this Standard:

(a) to the accounting for intangible assets acquired in business combinations for which the agreement date is on or after 31 March 2004; and

(b) to the accounting for all other intangible assets prospectively from the beginning of the first annual period beginning on or after 31 March 2004. Thus, the entity shall not adjust the carrying amount of intangible assets recognised at that date. However, the entity shall, at that date, apply this Standard to reassess the useful lives of


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GRAP 102 IAS 38 DIFFERENCES such intangible assets. If, as a result of that reassessment, the entity changes its assessment of the useful life of an asset, that change shall be accounted for as a change in an accounting estimate in accordance with IAS 8.

131. An entity shall apply the amendments in

paragraph 2 for annual periods beginning on or after 1 January 2006. If an entity applies IFRS 6 Exploration for and Evaluation of Mineral Resources for an earlier period, those amendments shall be applied for that earlier period.


Exchanges of similar assets 131. The requirement in paragraphs 129 and 130(b) to

apply this Standard prospectively means that if an exchange of assets was measured before the effective date of this Standard on the basis of the carrying amount of the asset given up, the entity does not restate the carrying amount of the asset acquired to reflect its fair value at the acquisition date.


Early application 132. Entities to which paragraph 130 applies are

encouraged to apply the requirements of this Standard before the effective dates specified in paragraph 130. However, if an entity applies this Standard before those effective dates, it also shall apply IFRS 3 and IAS 36 Impairment of Assets (as revised in 2004) at the same time.


Withdrawal of IAS 38 (issued 1998) 133. This Standard supersedes IAS 38 Intangible Assets

(issued in 1998).


grap 102 vs ias 38 sept07 - accounting standards … · page 3 of 53 grap 102 ias 38 differences...

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